Richer Romanians still worry about basics

By Justyna Pawlak

BUMBESTI-JIU, Romania (Reuters) - After Pirelli turned parts of Bumbesti-Jiu's crumbling industrial zone into a new factory last year, residents of this small town in southwestern Romania hoped the lean years were over.

After all, one investor brings another and before you know it, there is thriving industry and jobs. Or so the story went throughout Romania in recent years as foreign manufacturers poured billions of euros into the new European Union state.

But for all of Romania's economic progress made possible by foreign cash, last year's EU entry and four years of structural reforms, thousands of villages and small towns like Bumbesti-Jiu have yet to benefit from modernization and wealth.

Fears about job security and anger about being left behind now dominate Romania's political campaign ahead of the November 30 parliamentary election.

Even though Romania has the EU's fastest-growing economy and most people have yet to experience much impact from the global financial crisis, poverty and social protection are voters' main concerns.

"Expectations have risen faster than reality in Romania," said Sorin Ionita of the Romanian Academic Society think-tank.

Bumbesti-Jiu illustrates the pitfalls of Romania's slow transition from communism, plagued by botched reforms and corruption that until recently have kept the country far behind its Soviet bloc peers from central Europe.

Next to new industrial hubs such as the northwestern towns of Cluj and Timisoara, some areas still cope with unreformed communist-era industries, while corruption and fraud discourage initiative and distort the impact of free-market reforms.

The town's main employer, a state-owned ammunition factory, is shedding jobs fast as it struggles to turn a profit. Town authorities have yet to refurbish a communist-era industrial zone that could attract future investors.

"Pirelli is our only hope," said Mihaela Dungaciu, 45, who has worked in the ammunition factory for 26 years.

On her way to start the afternoon shift, she walked along a potholed road as ducks, chickens and piglets played on the curb. A crumbling fence and guard towers separated her workplace from the gleaming Pirelli factory.

CHANGING SOCIETY

Take the road 20 km (13 miles) in the opposite direction, past a wasteland littered with rusting iron and chunks of concrete, and the county capital, Targu-Jiu, tells a different story.

Nestled in the shadows of the Carpathian mountains, Targu-Jiu shows signs of the economic growth that, at least on paper, is lifting Romania out of poverty.

Unemployment is still above the national average of 4 percent, but its first hypermarket, German discounter Kaufland, opened last year and a shopping mall is planned for 2010.