San José State University
Department of Economics
Thayer Watkins
Silicon Valley
& Tornado Alley

The Economic History and
the Economy of Romania

Istoria economica de România

Where two of Earth's techtonic plates meet there is seismic activity; where three meet there is a hot spot of seismic and volcanic activity. Romania has been like a political hot spot where three imperial spheres met, the Ottoman Turk, the Russian and the Hungarian-Germanic.

Romania is of world interest because of its unique cultural history and because of the politico-economic history since World War II. It came under the control of one those evil, feudalistic dorks that rise to the top in Communist regimes. It was a regime that was more Stalinist than the Soviet Union and hence set records in human oppression and economic bungling. Once the evil dork Nicolae Çeausescu was overthrown a regime of excommunists gained control of the country. While not as oppressive as the Çeausescu regime it still bungled economic policy and Romania was forced to go through more painful economic and political transitions than the other countries of Eastern Europe.

Nicolae Çeausescu
The one on the left

Historical Background

In very ancient times, circa 2000 BCE, a people known as the Getae settled in the area where the Danube River empties into the Black Sea. In later history the Getae were called the Dacians.

By the period around 500 BCE Greeks had established trading colonies on the Black Sea coast at places such at the mouth of the Danube. These Greek colonies of course traded with the Dacians. By about 300 BCE the Dacians had created a state in region of the lower Danube. From there the Dacians and their allies raided into the provinces to the south.

The Romans, centuries later, in the days of their empire took control of the Dacians and their territories. The fortifications which the Romans built in the area were the northern frontier of the Empire. Since it was on the northern border the Roman gave special attention to Dacia trying to establish firm bonds with the Empire. The Emperor Trajan settled colonists from other parts of the Empire in Dacia. Many Dacians learned Latin and consequently the Romanian language is descended from Latin. Romanian is thus a Romance language, along with Italian, Spanish, Portuguese and French.

Because of the attacks by invaders from the east and north, such as the Slavs, Sarmatians and the Petchenegs, the Romans in 271 A.D. withdrew leaving the Dacians at the mercy of those invaders. The Slavs were not marauding invaders; they came to settle. The Slavic immigrants merged with the Dacians and the language remained a Romance language, but with a large number of incorporated Slavic words.

The social structure of the area was feudal with feudal lords called voivodes. The voivodes were able to fend off some invaders but not the invasions of which arose as a result of the rise of the Huns in fourth century, the Bulgar Turks in the seventh century, the Magyars in the tenth century and finally Genghis Khan's Mongol-Turk armies in the thirteenth century. These invasions included not only those by the Huns, Bulgars, Mongols and Turks but by other tribes which were displaced by invasions to the east. Many of the inhabitants of Dacia fled to refuges in the Carpathian Mountain in what is now north central and western Romania. The Transylvanian plateau of what is now northwestern Romanian was incorporated into the Magyar Empire and there are regions of Transylvania in which the population is largely of Hungarian descent as a result of that period of Magyar rule.

The armies of the Mongol Khans' swept through Romania in the thirteenth century. They conquered not only the low lands of Romania but also mountains and plateau regions. The Mongol-Turk invaders withdrew from Eastern Europe because of power struggles within the Mongol Empire. After the Mongol overlords left Romanian voivodes from Transylvania established the political kingdoms of Walachia and Moldavia in the lowlands. (The name Walachia derives from the same Germanic word walh for foreigner that was the basis for the names Wales and Cornwall, the areas which remained under Celtic control after the Anglo-Saxon invasion of Britain.)

In the fourteenth century the expansion of the Ottoman Empire was reaching the Balkans. Romanian armies participated in the failed efforts to counter the Turkish invasion. By the early fifteenth century Ottoman forces were reaching Walachia. Walachia after stiff resistance accepted Ottoman suzerainty (overlordship) in 1417.

There was a rebellion of serfs in Transylvania in the mid-fifteenth century against their feudal masters but it was suppressed by an alliance of Hungarian and German feudal lords.

In 1541 Ottoman forces captured Buda, the principal city of the Hungarian state. Transylvania which was under Hungarian control at the time was made into a semi-autonomous state under the control of the local Hungarian lords.

(To be continued.)

Russian Imperial Involvement in Romania

In 1711 Walachia and Moldavia were still under Ottoman suzerainty, but Ottoman power was waning. Czar Peter the Great attempted to wrest Moldavia from the Ottoman Empire. The princes of both Walachia and Moldavia were in favor of the Russian venture.

Ottoman forces were able to thwart the Russian seizure of Moldova but lacked the will to administer the principality. So instead of directly ruling Walachia and Moldavia the Ottoman authorities sold the right to rule in the principalities to Greek financiers living in the Phanar (lighthouse) District of Istanbul. These Greek financiers, called Phanariot princes, ruled harshly, milking the principality for all the revenues they could extract.

There was a rapid turnover in rule by the Phanariot princes which made their extractions even worse. But Russian influence continued to grow. Between the years 1739 and 1853 Russian forces invaded Walachia and Moldavia about ten times securing increasing influence but allowing the retention of the principalities within the Ottoman Empire. Finally a Russian invasion of the principalities brought on the Crimean War with Austria joining the Ottoman Empire in opposing the Russian Empire.

In 1856 there were the first tentative steps for unification of the principalities. A referendum indicated popular support for unification but an international conclave in 1858 asserted the continued separation of Walachia and Moldavia. However the legislatures of Walachia and Moldavia in 1859 achieved effective unification by separately electing the same governor, Alexandru Ioan Cuza, for the two principalities. The European powers and the Ottoman Empire then accepted the unification of Walachia and Moldavia with Cuza as its monarch.

Cuza undertook major reform programs alienating the wealthy classes and in 1866 the army forced Cuza to abdicate and go into exile.

Charles, a member of the Hohenzolleran-Sigmaringen family of southern Germany, was selected to replace Cuza as monarch. Charles' reign lasted from 1866 to 1914.

The Franco-Prussian War of 1870 precipitated a political crisis in Romania and Prince Charles tendered his resignation but the regents refused to accept that resignation and Charles continued as prince.

In 1877 the Russian Empire and the Ottoman Empire went to war. Prince Charles of Romania supported the Russian forces with troops which he led into battle. Nevertheless Russia did not allow Romania to participate in the peace settle at the Congress of Berlin in 1878. The Congress accepted Romania independence from the Ottoman Empire under the condition that Romania turn over Bessarabia to Russia. Russia in turn promised to transfer sovereignty of Dobruja to Romania. Key features of this promise were not kept and Charles developed a deep distrust of Russia.

In 1881 the Romanian parliament declared Romania a kingdom and made Prince Charles king. Because of his distrust of Russia, King Charles negotiated secret treaties with Germany, Italy and the Austro-Hungarian Empire in 1883.

In 1888 there was a violent rebellion of the peasant farmers of Romania over the issue of land ownership distribution. This occurred again in 1907. The death toll in the suppression of these peasant uprisings reached into the tens of thousands.

Synopsis of the Assembly of the Romanian State

The Balkan Wars Preceding World War I

As the Ottoman Empire fell apart there were several states eager to acquire the pieces. In 1908 the Austro-Hungarian Empire annexed Bosnia, which Serbia by proximity and ethnic affiliation expected to gain.

The First Balkan War began in October of 1912, involving Bulgarian, Serbian, Montenegrin and Greek military forces defeating Ottoman forces. Romania threatened war against Bulgaria over control of the Dobruja region. Arbitration in St. Petersburg in 1913 awarded Romania its claims of Dobruja.

The Second Balkan War commenced in June 1913 with Bulgaria attacking Serbia and Greece. Later Romania and the Ottoman Empire joined in attacking Bulgaria. The war ended in July of 1913. Romania obtained control of Dobruja.

Romania and World War I

King Charles signed secret treaties with Germany and the Austro-Hungarian Empire in 1883 and renewed them in 1913. There was not popular support for an alliance with Hungary because it controlled Transylvania the northwest third of what is now Romania. The dominant ethnic group in Transylvania was Romania allow Hungary had promoted the settlement of Hungarians in the region. As the chain of events that would lead to World War I linked together, Romania was offered two different territorial incentives to join the two antagonistic groupings. The Russian Empire offered Transylvania as an incentive for Romania to join the Allied Powers. Germany and Austro-Hungaria offered Bessarabia in return for joining the Central Powers. Charles died in 1914 and his successor Ferdinand waited until the outcome of the war was discernible in 1916 to join the Allied Powers of France, Britain, Russia and Italy.

Romanian forces were not successful against the German and Austro-Hungarian troops in the region. German and Austrian forces occupied the capital of Romania, Bucharest. Bulgarian forces also invaded Romanian territory.

The collapse of the Russian Empire forces made the situation for Romania untenable. After the Brest-Litovsk brought an end to the war on the eastern front, Romania sought an armistice. The Treat of Bucharest was signed in May of 1917. In that treat Romania lost Dobruja to Bulgaria. There were other severe penalties imposed upon Romania in that treaty.

But by the middle of 1918 the military situation for the Central Powers was collapsing. Bulgaria collapsed militarily, as did the Austro-Hungarian Empire. Germany was in retreat on the western front.

Local councils in Transylvania, Bukovina and Bessarabia declared for unification with Romania.

In the Paris Peace Conference in 1918 Romania was given sovereignty over Transylvania, Drobuja, Bessarabia, Bukovina and part of the Banat. A leftist government in Hungary tried to thwart the takeover of Transylvania by Romania and a war broke out. In that war the Romania army occupied the Hungarian capital of Budapest. When it left it took industrial and transportation equipment as a prize of war and in retaliation for what had been taken by Central Power armies when Bucharest was occupied during World War I.

Greater Romania in the 1920's

Peace of sorts was brought to the region with the treaties between Romania and Hungary which officially accepted the transfer of Transylvania to Romania. But Transylvania while predominantly populated by ethnic Romanians did include a large number of ethnic Hungarians and Germans.

In addition to the problem of ethnic conflicts there were the social class antagonisms. In the late nineteenth century about two thousand landowners held about half of the land in Romania. The Romanian peasants, who constituted about ninety percent of the population, in total owned only one third. King Ferdinand decided to stave off a social revolution of the sort that toppled the Russian Empire. He promoted a redistribution of land. A peasant revolt in 1907 led to deaths of ten thousand. At that time 10 million acres were distributed. The large landowners still held about 7.5 million acres. Between 1917 and 1921 almost nine million more acres were redistributed. After the redistribution peasants with holdings of twenty five acres or less owned 60 percent of the tillable land.

World War I drastically affected the political scene in Romania. The Conservatives, who were associated with German interests, lost political influence. (Conservative in this context does mean what Conservative means in current American parlance. American conservative ideology would have been called liberal and Romanian Conservatism was outside of the American political spectrum, having to do with the role of the church and the protection of landed interests.)

The Liberal Party of Romania was able to control the government from 1922 to 1928. A National Peasant Party, formed in 1926, became a major contender for power. The Social Democrats were present but only weakly so. A splinter group of the Social Democrats formed the Romanian Communist Party in 1921, but it was infinitesimal in significance. The heir to the throne, Prince Carol, went into exile in 1927 as a result of a personal scandal. King Ferdinand died soon after Prince Carol went into exile. When the Liberal Party lost an election to the National Peasant Party the leader of that party asked Prince Carol to return, which he did in 1930.

At the onset of the Great Depression Romania went through some political upheavals. King Carol dismissed the National Peasant Party government and put a coalition government in its place. The National Peasant Party regained power but the next election in 1932 brought the Liberal Party back into power.

The Terrorism of Fascist and Communist Parties in the 1930's

When economies began to suffer the dislocations of the Great Depressions collectivists of all stripes interpreted the events as the death throes of capitalism and they girded up to win political control of their countries. The fascists and the communists both tried to emphasize their differences but fundamentally they are both collectivists. They organized into political gangs that fought each other and their activities amounted to simple thuggery. The fascist organization, known as the Iron Guard out did the communists in thugery, partly because they were more of them. In imitation of Mussolini's Black Shirts the Iron Guard marched in green shirts. Their leader, Corneilu Codreanu, called for political assassinations. In 1933 the prime minister who was leader of the National Liberal Party was assassinated by Iron Guards.

In 1937 the National Liberal Party lost control of the government and a coalition of nationalistic parties took over. The continuing political turmoil led King Carol to suspend the constitution and effectively put the country under martial law. Fourteen of the top leaders of the Iron Guard, including Codreanu, were arrested and then later shot allegedly while trying to escape. The Iron Guard, even when decapitated, continued to carry out assassinations and persecutions of Jews.

In August Germany and the Soviet Union negotiated a nonaggression treaty; i.e., Adolph Hitler and Joseph Stalin agreed to divide up Eastern Europe. Hitler then invaded Poland, initiating World War II. The Romanian government tried to keep Romania neutral in the war that was developing, but Iron Guard members assassinated the Prime Minister. The new prime minister, General Ion Antonescu, subsequently forced King Carol to abdicate. Antonescu allowed the Iron Guard free rein to unleash vengeance on the previous regime.

Antonescu was strongly pro-German and Romania entered into an alliance with Germany and Italy. German troops poured into Romania. When the Iron Guard continued their street thuggery the soldiers destroyed them.

Romania and World War II

Romania's alliance with Germany did little to protect Romanian interests. In June of 1940 Stalin demanded the return of Bessarabia and the turnover of Bukovina to the Soviet Union. Germany told Romania to concede, which it did. In August Bulgaria took over the southern part of Drobuja. Also in August Romania was forced to cede Transylvania to its Axis partner Hungary. In September of 1940 the Iron Guard forced King Carol to abdicate. Carol's son Michael became king but the power was in the hands of the prime minister, Antonescu.

In June 1941 Hitler ordered the invasion of the Soviet Union and Romania was suddenly in the midst of the war. Romanian troops assisted the German invasion of the Soviet Union. Romania was extremely important to Germany as a source of petroleum. Hitler granted Romania the return of Bessarabia.

Romania participated in the early victories over the Soviet forces but then suffered heavily in the defeat of Axis forces at Stalingrad.

By mid-1943 Romania was seeking an exit from the war. Some were seeking to negotiate a surrender to the Allies (the U.S. and Britain). But the U.S. and Britain would not accept a separate peace agreement with Romania with Soviet participation.

The major political parties joined with the Communist Party to form a National Democratic Bloc in June of 1943. King Michael led a coup d'etat which imprisoned Prime Minister Antonescu. King Michael empowered a new government and issued a cease-fire order to the Romanian army, thus taking Romania out of German alliance two years before Germany's final defeat. This surrender did not take Romania out of the war. Romania was required to send troops to fight against Germany under Soviet direction. About the same number of Romanian soldiers were killed in this phase of the war as when Romania was a German ally.

King Michael selected General Constantin Sanatescu to head a new government. Sanatescu had the backing of the National Peasant Party and the National Liberal Party.

The Transition of Romania to Communist Control After World War II

In October of 1944 Winston Churchill visited Moscow. He proposed a division of post-war Europe into spheres of influence. In Churchill's proposal Romania was relegated to the Soviet sphere of influence. Stalin accepted Churchill's proposal. Franklin Roosevelt was not privy to Churchill and Stalin's agreement. In February of 1945 all three leaders met at Yalta and issued public statements calling for free elections in the countries soon to be liberated from Axis control. Stalin later showed that he believed his secret agreement with Churchill to be the real arrangement and that Yalta was a mere charade. It does not seem that Stalin was being unreasonable in this matter. The fault lies with Churchill.

In the post-war politics in Romania the two contenders for power were the National Peasant Party and the Social Democrats.

General Sanatescu was still in control of the government. Communists called for Sanatescu to appoint more Communists to high government office. Sanatescu resigned over the issue, but King Michael asked to try to form another government but that government also collapsed. The government leadership was given to General Nicolae Radescu, who did appoint Communist as head of the Ministry of the Interior. That Communist appointed other Communists to govern the police force and the security forces.

The Communist Party forces then began a campaign of social disruption to try to bring down the Radescu government. Communist thugs shot and killed demonstrators opposing them. The Communists then blamed the shootings on the government and demanded Radescu bring political order out of the chaos. Radescu then attempted to trump the Communists. At the end of February of 1945 he announced new elections.

The Communists definitely did not want elections which would reveal their electoral weakness. To prevent the elections Stalin sent to Bucharest the deputy foreign minister of the Soviet Union, Andrei Vyshinsky. Vyshinsky went to King Michael and presented him with an ultimatum: Either appoint Petru Groza to replace Radescu or risk the annihilation of Romania as a political entity. If King Michael did appoint Groza then Vyshinsky promised the Soviets would guarantee the return sovereignty over Transylvania to Romania. King Michael of course dismissed Radescu and appointed Groza.

Petru Groza as prime minister appointed Communists to head all of the major ministries. There was then Communists in control of the army, the interior, the economy, the judiciary and propaganda. No real members of the other political parties were given appointments.

The U.S. and Britain protested the Communist takeover in Romania but to little avail.

In October of 1945 the Romanian Communist Party announced its leadership. A Romanian Communist Gheorghe Gheorghiu-Dej was the Party Secretary, several of the other top posts went to people who lived in Moscow until the end of the war and were sent by Stalin to control the Romanian party. These included Ana Pauker, a Moldavian Jew, who denounced her own husband as a Trotskyite in the Stalin purge of the Soviet Communist Party. Another was Vasile Luca, an ethnic Hungarian (Szeckler), from Transylvania who had become a major in the Soviet Army. It was not hard to see where the loyalties of these two lay.

The election of November of 1946 was fraught with intimidation and fraud. Groza announced a 90 percent vote for the coalition dominated by the Communists.

The economy was prostrate; production was only half of its prewar level. The year 1947 was a year of famine. The Soviets gained control of key Romanian industries.

In 1947 the Communists eliminated all non-Communists from positions of influence in the government. Even people who eagerly cooperated with the Communists were eliminated. Groza and Gheorghiu-Dej went to King Michael and forced his abdication.

The Communist takeover of Romania was complete. New elections were held in March of 1946 in which the Communist-controlled National Democratic Front took 405 of the 414 legislative positions. About a month later this Communist legislature declared Romania to be the Romanian People's Republic.

The Romanian People's Republic

Once the Communist Party had gained political control in Romania it instituted a full fledged Stalinist program. It is important to realize that Gheorghiu-Dej and the other top leaders of the Romanian Communist Party were thoroughly Stalinist.

The Stalinist structure included as a first requirement the establishment of a secret police, the Securitate. Then any act that was deemed dangerous to the state became punishable even if there was not a law making it a crime. Economic crimes such as running a private business were made capital offenses; i.e., making a profit was punishable by death. People's Councils were created to enforce the state dictates at the local level and to provide surveillance for the state.

In June of 1948 the Romanian National Assembly enacted legislation which nationalized the manufacturing, transportation, financial and mining sectors of the economy. The laws provided for compensation to the owners of the businesses nationalized but the state chose not to comply with that element of the laws.

Stalin forced the collectivization of Russian agriculture in the 1930's. It was a disaster there but nevertheless it became part of the Stalinist program so the Romanian Stalinists tried to implement a collectivization of Romanian agriculture. As in Russia, one component of this collectivization was to declare any farmers resisting collectivization as class enemies, kulaks in Russian, and send them to prison camps. Unfortunate it was the most productive farmers who were declared class enemies and taken out of production. This and the lower productivity of collective farms resulted in food shortages in Romania, just as they had in other places where Stalinist collectivization was carried out.

Five-year plans were a hallmark of Stalinist economic control and Romania instituted its First Five Year Plan in 1951. This entailed investment in heavy industry and the undertaking of mega-projects. The mega-project of the Romanian First Five Year Plan was a Danube-Black Sea Canal. This project absorbed a great deal of the investment funds over the years without providing significant benefits.

As in other Stalinist programs there was a campaign to eliminate illiteracy combined with a program to take away the opportunity of reading anything except government propaganda. Writers and artists were given support by the state but required to adhere to the Social Realism that had developed in the Soviet Union. The educational institutions were programmed to develop communal values and the socialist man.

Communists like to point to literacy programs, housing construction etc. as evidence for the benevolence of their system, but these are all the benevolences of slaveholders. Owners of slaves do not abuse their property. They take away the freedoms but they are concerned with the sustenance, health and training of their slaves.

There was a special aspect to the Stalinist program in Romania and the other states of Eastern Europe. This was the Russianification of the people. Instruction in the Russian language became required. The official histories glorified the Russians. If this type of indoctrination had been carried out by Nazi Germany it would have been attributed to the Nazi master race doctrine. There was not an official master race doctrine of the Soviet Union but in practice there was.

In 1948 Stalin broke with Tito of Yugoslavia, not over any ideological differences, but over Stalin's irritation with Tito for not following his orders unquestioningly during World War II. Stalin ordered Tito to cooperate with the Yugoslavian monarchists because Stalin wanted to convince Churchill that the Communists were willing to cooperate and compromise on ideological issues and thus deserving of more material aid during the war. Tito refused to cooperate with the monarchists and Stalin never forgave him for this insubordination even though Tito was a thoroughgoing Stalinist in terms of economic and social policies.

Stalin called for a purge of any Communists in Eastern Europe who, like Tito, might be too independent and nationalistic in their beliefs. Gheorghiul-Dej used this call for a purge of unreliable elements to rid himself of the agents of Stalin who had been imposed upon Romania at the end of World War II.

When Stalin died in March of 1953, the new leaders in the Soviet Union began revising the social and economic policies of Stalin. Finally, in 1956, Nikita Khrushchev denounced Stalin. This gave Gheorghiu-Dej, a thorough-going Stalinist, an excuse to assert a degree of independence from the Soviet Union, now under the control of revisionists. The same sort of phenomenon occurred in China with the Maoists denouncing the Soviet revisionists and asserting independence.

While Gheorghiu-Dej disagreed with Khrushchev about Stalin, he agreed with Khushchev's military suppression in 1956 of anti-Communist uprisings in Poland, East Germany and Hungary.

Georghiu-Dej had to strike a delicate balance of relying upon Soviet military might to suppress anti-communist uprisings but keeping Soviet influence at bay in matters of Romanian independence. In 1957 he was able to get the Soviet Union to withdraw Soviet troops from Romania. Subsequently Gheorghiu-Dej was able to take a more independent line with respect to dissident Communist states of China, Yugoslavia and Albania. In 1964 Romania in effect joined the dissident states with a proclamation denouncing Soviet hegemony. There was a program of erasing the Russianification programs which had been imposed in the early days of the Communist regime in Romania.

The Death of Gheorghe Gheorghiu-Dej
and the Rise of Nicolae Çeausescu

In the late 1930's Nicolae Çeausescu was in prison with Gheorghiu-Dej. Perhaps Çeausescu would have still risen to prominence without this prison tie to Gheorghiu-Dej but probably not. In the early days of the Romanian People's Republic Çeausescu was given positions of power in the Communist hierarchy but not at the top level. When Gheorghiu-Dej purged the party of the agents of Stalin Çeausescu rose to the Politburo level. Later when Romanian revisionists tried to depose Gheorghiu-Dej, Gheorghiu-Dej replaced them and one of their replacements was Çeausescu.

Gheorghiu-Dej died in 1965 and Çeausescu was one of the triumvirates that assumed power. Çeausescu very quickly outmaneuvered the other two members of the triumvirate and took absolute control. He did share power with his wife, Elena.

In 1971 the Çeausescus visited China and saw the Maoist personality cult in operation. They came back to Romania and instituted their own cult. Among other things this involved Nicolae Çeausescu being referred to in official documents as the Transylvanian Genius. A prettified version of his picture was displayed not only inside of public buildings but on the front of such buildings.

Elena Çeausescu came from a poor family and left school at the elementary level. She worked in the textile industry and, for a short period, as an unskilled assistant in a chemical laboratory. This gave her a desire to be considered a scientist. In her husband's government she became head of agencies dealing with science and technology. She tried to cover her lack of academic training by acquiring honorary degrees and bogus degrees. She managed in Romania to acquire the equivalent of a Ph.D. without having completed highschool or an undergraduate degree. Her dissertation in chemistry was said to have words in the title that she could not pronounce, much less understand the meaning of. In 1973 Elena Çeausescu became a member of the politburo of the Romanian Communist Party.

While Nicolae trusted his wife he did not trust others. He carried out purges of the army and instituted a program of circulation of the cadres to prevent anyone developing a locus of power.

Çeausescu got a good deal of political support in the West for his independent stance against the Soviet Union, but it was the stance of a Stalinist who was even worse than the Soviets.

Economic Development in Romania

Romania's economy before World War II had been primarily agricultural. It did have very substantial petroleum reserves and was a prize target in the war because of that petroleum. There was a substantial commercial sector in Romania in the ownership of people of German origin, both Jewish and non-Jewish. With the Danube River Romania had a good transportation link to the Black Sea and from there to international markets.

The Romanian Stalinists in the Romanian People's Republic duplicated all the mistakes of the Stalinist program of Russia. The collectivization of agriculture was a failure and resulted in food shortages. People from the farm areas fled from collectivization to the cities looking for jobs. As in Russia the investment in heavy industry achieved production and employment of a sort, but less than meets the eye. It is common for people to mistake the forced creation of heavy industry for economic development and growth. When resources are taken away from self-supporting industries such as agriculture and put into an industry such as steel production which cannot support itself that is not economic development. The nonviable industry not only uses up resources that have a higher value elsewhere in the economy but the subsidies continue to drain resources away from the viable industries. The net result is that the forced creation of nonviable industries decreases overall production. This happened not only in the hardcore feudalistic socialisms of Eastern Europe and China but also in the bureaucratic socialisms of India, Latin America and Africa.

When Çeausescu achieved power in 1965 the Romanian economy was still a planning failure. He decided to try to achieve development by increasing contact with the West and borrowing to fund investment. The investment of the borrowed funds produced increases in production, but when the loans had to be repaid the reality of the inefficiency of socialist investment become apparent. The reality was that the investment did not really increase output. By about 1978 petroleum production declined and Romania was having to import petroleum. The government limited Romanian families to one 40 Watt bulb per apartment. Thermostat settings were set by government decree with control squads to enforce those decrees.

During the 1980's Çeausescu decided to repay the loans by exporting as much agricultural production as possible. This led to food shortages and near-starvation. Here is a personal note. During this period a friend, an American woman, went to Romania to teach English. As a foreign she had privileges and access to food that ordinary Romanians did not have, yet she suffered from the food shortages and she was not a heavy eater. She said that when she had a vacation from the teaching program she and the other teachers went immediately to Italy where they could get something to eat.

So the net result of the socialist investment program of the late 1960's and the 1970's was a diminished standard of living in Romania in the 1980's. This is not economic development; it is diminished production. The privation was not just in food. In the winter of 1984-85 the government banned automobile traffic in Bucharest and shut off the heat even in the hotels and embassies occupied by foreigners. The workers in the petroleum industry were under military discipline. It was a garrison state.

The End of the Çeausescu Regime

Romania endured another four years of rule by the Çeausescus. Their end came from an unanticipated source in December of 1989. In the western city of Timosoara there was a young minister of Hungarian ethnicity named Lázló Tökés who had been preaching sermons lamenting the lack of freedom in Romania. The Securitate had been persecuting him for months and decided in mid-December to evict him from his church. The congregation tried to prevent this. The people in the street joined with the congregation.

To the Çeausescus this must have seemed like a minor incident. Their activities in the fall of 1989 gave no indication that the country was on the verge of a revolution. Çeausescu sent in more Securitate troops with orders to shoot. He publically declared the incident to be due to Hungarian, Soviet and American instigations. He and his wife left for a short visit to Tehran.

After a delay the Securitate began to shoot the demonstrators. The demonstrators were not intimidated. Romanian army soldiers began to join the demonstrators. The news of the killing of the demonstrators in Timosoara spread via foreign broadcasts to the other cities of Romania.

The Çeausescus returned from Iran on December 20th. Çeausescu underestimating the situation did a very foolish thing. This Transylvanian Genius apparently had come to believe his own propaganda. He called for a mass meeting in public square in Bucharest outside of his Communist Party office building. He thought he could demonstrate public support for his regime. Instead the crowd began demonstrating against him. The protest could not be contained and the Securitate fired on the demonstrators killing some.

On December 22 when he tried to address the crowd outside of the Central Committee headquarters he saw that he had lost control. The Çeausescus tried to escape by helicopter. They were captured by an army unit about sixty miles from Bucharest. They tried unsuccessfully to bribe the army unit to let them escape. They were for a few days kept captive in an army personnel carrier. The demonstrators and the army soldiers that joined them were fighting the Securitate in the streets. Demonstrators capture a television broadcast studio and were beaming Free Romania news to the public.

The revolutionaries saw that as long as the Çeausescu were alive the Securitate would fight the revolution. They brought the Çeausescus to trial and after their conviction of crimes against the Romanian people. The Çeausescus were immediately taken outside to face a firing squad. The bodies were photographed and the images of the dead Çeausescus shown to the public.

The Aftermath of the Fall of the Çeausescus

What transpired after the deaths of the Çeausescus was a monumental tragedy. High level members of the Romanian Communist Party were able to highjack the revolution. Ion Iliescu organized a provisional government calling itself the National Salvation Front (NSF). The NSF government reversed the economic policies of the Çeausescus which were creating economic hardships. The restrictions on energy use for heating, for example, were abandoned. Food warehouses were opened up and the food distributed. But the Securitate was not be prosecuted. The NSF government said it was going to ban the Romanian Communist Party but did not do so.

In January the demonstrators went back into the streets to protest the NSF's inadequate measures. The NSF promised elections.

The elections took place in May. In the campaign opponents of the NSF were suppressed. The NSF government disguised its Communist Party origins by playing upon nationalism and encouraging ethnic strife. It controlled television broadcasting.

The NSF won a lopsided victory in the elections. Most likely it would have won that victory even without the election frauds that were perpetrated. The Romanian people were too grateful for the end of Çeausescu to question the legitimacy of the NSF.

In June the head of NSP, Ion Iliescu, ordered the police to remove demonstrators from Victory Square in Bucharest. The public came out in support of the demonstrators. Iliescu did not dare to try to use the army to suppress the demonstration. He instead organized trains to bring in ten thousand coal miners from the Jiu Valley. He claimed that he needed them to help save the revolution from neofascists. The government-controlled media broadcast bogus newscast of the purported neofascist demonstrators trying to wreck the government. The miners used clubs to beat the demonstrators into submission. The Revolution was thus hijacked and liquidated by Iliescu and the National Salvation Front.

(To be continued.)

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