Ukrainian President Volodymyr Zelensky visited Romania on Oct. 10, but the visit did not go entirely as planned, with a scheduled speech in front of the country’s legislature scuppered at the last minute.
Zelensky himself called off the speech, but the real reason was pushback from Romania’s nationalist opposition party, the Alliance for the Union of Romanians (AUR), which threatened to protest the speech. The party has seen its support more than double since the 2020 parliamentary election. It leads in some polls for next year’s European Union elections in the country, even though Ukraine and Moldova have both banned its leader from entering their countries over alleged connections to the Kremlin.
The country faces a turning point—both in terms of its position on Ukraine and its position in Europe. In the aftermath of the return of Slovakia’s controversial populist Robert Fico and its subsequent shift toward a stance approaching Hungary’s in terms of resisting European support for Kyiv, Bucharest is likely to prove the next battleground for the agenda. Except it is far more significant.
Romania plays a major role in providing humanitarian aid and delivering military equipment to Ukraine, but most importantly, it is the linchpin ally in enabling grain to reach world markets. More than half of Ukrainian grain has been exported via Romania since Russia’s full-scale invasion began last February.
Romanian relations with Kyiv are a sensitive issue domestically and internationally. Romania’s potential turn will have major ramifications for Europe’s wider economic and political environment, as the country is also set to play a key role in European, and global, energy security over the coming years.
This June, Austria-based multinational OMV and Romanian gas company Romgaz announced that they plan to invest up to 4 billion euros (about $4.26 billion) in developing natural gas fields in the Black Sea, a project that the companies believe could produce at least 10 billion cubic meters of natural gas per year. Infrastructure development is due to begin next year, and it is hoped that production will begin in 2027. The development of this resource offers the promise of mitigating Russian threats over the medium term because of the promise of Romania’s own hydrocarbons industry.
The successful development of Romania’s gas production offers the ability to blunt the key economic weapon that the Kremlin has used against Europe alongside its war in Ukraine, namely, the weaponization of natural gas supplies that began before the full-scale invasion and subsequently intensified in its aftermath.
The impact of the Kremlin’s strategy has been significant, driving inflation to highs not seen in decades, although the European Union has been successful in decreasing its dependence on Russian natural gas—with Russian gas falling to just 8.4 percent of European imports in the first seven months of 2023, down from 45 percent in 2021.
Nevertheless, the Kremlin has made clear that it is willing to target European economies, and in turn support for Ukraine, through other commodities as well. Its withdrawal from the Black Sea Grain Initiative in July has not had the feared major impact on global grain prices, but it has driven up tensions over European gas markets, including a World Trade Organization dispute from Kyiv against Hungary, Poland, and Slovakia over their unilateral restrictions on Ukrainian grain, while the AUR and other Romanian political parties have also flirted with such action. There is little doubt that Russia will continue such efforts across various classes of commodities.
But gas is undoubtedly the most significant, with a tight global market that is jittery about any disruptions in supply for the foreseeable future. In the past week, European and global gas prices have spiked over a suspicious leak in an offshore pipeline between Finland and Estonia, as they did over threatened strikes in Australia in August. Further gas price increases also threaten to drive renewed inflation, which in turn will require further elevated interest rates and the political and economic costs that those bring.
It is therefore paramount for Ukraine, Europe, and the wider West to see Romanian gas flow as soon as possible. Russia, inversely, has every reason to oppose it. Russia’s militarization of the Black Sea—where it claims territorial waters bordering Romania through its illegal occupation and annexation of Crimea—is an obvious immediate threat, but not the only one, and in Romania it may seek to take advantage of the relative lack of attention that the market receives to try to undermine the project.
Russia has a long history of using networks of influence and business partners to gain a foothold in energy projects across Europe, including in Romania. Russian companies have investments in the country’s metals sector and across its hydrocarbons and port industries. A number of Romanian businessmen have also been long-standing partners of the Kremlin in providing services in Russia.
Far too often, these actions have sailed under the radar. And while the United States and European Union have both adopted significant new anti-kleptocracy agendas in recent years—and underpinned them with threats of sanctions—the bark has been worse than the bite.
For example, the Romanian oil services company Grup Servicii Petroliere (GSP)—controlled by CEO and Board President Gabriel Comanescu—has a long history of contracting with the Kremlin. It also has not announced plans to leave the Russian market, despite increased sanctions following the outbreak of war and even as the brutality of Russia’s invasion and associated war crimes has become apparent.
The company has previously undertaken work that would now be in violation of international sanctions, most notably in July 2014, when it helped the Russian state oil company Gazprom Neft by undertaking drilling work in the Arctic Sea. That contract was announced just five days before the United States introduced its sectoral sanctions on Russia, which specifically banned support for Russian Artic hydrocarbon development projects for affected companies. Gazprom Neft was added to the list shortly thereafter, but GSP’s contract slipped by just in time.
GSP has also been the subject of investigations resulting in revelations from the Panama Papers. Romania’s RISE project, a nonprofit investigative journalism group working in collaboration with the Organized Crime and Corruption Reporting Project, reported in 2017 that the firm had not only extensively used offshore structures to minimize its tax payments, but also engaged in suspicious transactions to acquire 10 drills from OMV’s joint venture with the Romanian government, OMV Petrom. A local union leader was subsequently jailed for embezzlement.
Romania’s track record in targeting corruption and Russian influence networks on its own has been mixed. The state’s National Anti-Corruption Directorate (DNA) was not long ago highlighted as a leading example in Eastern Europe for such efforts, but its reputation has since suffered substantial hits. Former directorate head Laura Codruta Kovesi was sacked in 2018 after the Social Democratic Party (PSD) demanded her removal despite President Klaus Iohannis seeking to stop the move, a sacking that the European Court of Human Rights ruled violated due process.
Although Codruta Kovesi has since become the European Union’s chief prosecutor, the anti-corruption agenda in Romania has effectively been frozen in its tracks since her removal. There has been quick turnover in the leadership of the DNA, and Romanian media has repeatedly reported that its directorship has become subject to the political preferences of the government rather than prioritizing effectiveness in tackling corruption.
Romanians repeatedly took to the street in 2017 and 2018 to protest against judicial reforms perceived as institutionalizing political control over the justice system, and the December 2020 election saw the liberal USR Plus alliance record its best-ever result with nearly 16 percent of votes, putting it in third place behind the long-dominant political factions, the PSD and its rivals in the nominally center-right National Liberal Party (PNL).
Even before the rise of AUR’s electoral threat, Romania’s fractured parliament has been highly dysfunctional—and left the country without a credible capability to tackle corruption and potential Russian influence on its own.
A brief alliance between USR and PNL collapsed after just nine months. Romania has had four prime ministers in the past three years, and the latest coalitions have brought together the PNL and PSD, albeit with the prime minister office rotating between the two. Their latest government, formed in June 2023, is headed by PSD leader Marcel Ciolacu.
Meanwhile, the USR Plus alliance has split, and many of the PNL’s voters appear set to abandon it for the far-right populist Alliance for the Union of Romanians, dragging the country’s entire political discourse to the right and away from the challenge of corruption.
Romania’s gas promise, however, also needs to be a priority to ensure that it is developed for the benefit of Romanians—and for Europe and Ukraine. Yet, with a track record of serving as a vehicle for Russian influence, sanctions evasion must be kept out of Romania’s burgeoning Black Sea gas industry. Europe must also act now to engage proactively to address Romanians political concerns, lest the AUR take advantage of the situation.
But there are still glimmers of hope—a recent poll found that NATO Deputy Secretary Mircea Geoana is favored to win the presidency if he runs as an independent.
It is not too late for Romania’s turning point to be a positive one.
Correction, Oct. 30, 2023: Marcel Ciolacu was not investigated by Romania’s National Anti-Corruption Directorate under Laura Codruta Kovesi, as originally stated.
