Romania

Whatever Happened to Romania? | Global Finance Magazine

Romania has great tech and is the region’s top energy producer, yet it’s mired in an economic slump.

This article appears in the November issue of Global Finance Magazine.

For investors, southeastern Europe’s largest and most diversified country remains a mystery. 

Renowned for its potential, Romania boasts a thriving information, communications, and technology sector; unicorn start-ups such as automation software company UiPath; and regional stars like OMV Petrom, the region’s largest energy producer; renewables producer Hidroelectrica; and Automobile Dacia. But development has gone badly off track, making Romania an outlier to the region’s upbeat picture.

Romania recorded negative growth of 0.8% in the first half of 2026, down from just 0.7% for all of last year, according to the latest Regional Economics Survey from the European Bank for Reconstruction and Development. The fiscal deficit, the current account deficit, and inflation remain either the highest or among the highest in the EU. 

A dramatic drop in foreign direct investment inflows, from €3.4 billion ($3.82 billion) in the first half of 2025 to just €527 million in the first half of this year, suggests difficulty in covering a predicted 2026 current deficit of €14.2 billion, leaving Romania heavily dependent on EU fund inflows, which have increased 32.5% year-over-year to €5.16 billion. 

What Went Wrong?

Romanians are being hit by steep hikes in energy and food prices and persistently high inflation. But much of the blame for the country’s failure to address these problems lies with its fractured, ineffectual political class, which has blocked attempts by successive coalition governments to control spending and carry out structural reforms. 

Romania has been without a government since May 5, when one of Prime Minister Ilie Bolojan’s coalition partners, the Social Democrats, sided with the far-right Alliance for the Union of Romanians to block a package of spending cuts intended to address a rising budget deficit. Since then, Bolojan has been unable to pass a budget or form a new government, causing the Romanian leu to depreciate and dramatically boosting inflation and borrowing costs. 

“Romania’s political class is doing what Italy’s did in the late 20th century, ramping up spending and debt to unsustainable levels,” said Charles Robertson, head of Macro Strategy at consultancy FIM Partners. “Bond markets now price Romania as a junk bond country, although the rating agencies have it just inside investment grade, all with a negative outlook.” 

In its last review, on July 31, Fitch Ratings affirmed Romania at BBB- Negative, citing “deteriorating public finances due to large, albeit declining, fiscal deficits and rising government debt/GDP.” 

Malgorzata Krzywicka, director on Fitch Ratings’ Emerging Europe Sovereign team, expects Romania’s economy to contract by 0.6% this year, bringing average real GDP growth to just 0.3% in 2024-26, compared with 4.7% in 2015-19. Potential growth has fallen from about 3.5% before the pandemic to closer to 2%. 

“The key challenge,” she said, “is whether private investment and recent structural reforms can offset these trends as EU funding gradually normalizes from recent peaks and public investment becomes a less powerful growth driver.”

Can Confidence Be Restored? 

Yes, but Romania’s political class must get its act together, said Radu Cracan, regional, policy & strategy economist at the EBRD.

“We strongly advocate for better and more reliable governance, more targeted and private sector-facing economic policymaking, more innovation, and better skills and human capital,” he said. “Ensuring a predictable regulatory and fiscal environment will be critical for foreign investor confidence.”

That’s a tall order for a country that has long puzzled investors by failing to make progress on these fronts. 

Nic Wirtz is a contributing writer based in Guatemala.

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Romania says Russia-run sabotage network set fire near weapons factory | Russia-Ukraine war News

Authorities say the fire in Brasov in September is part of a broader Russian campaign against European countries that support Ukraine.

Romanian authorities say they have uncovered a network “coordinated” by Russia that they believe was responsible for a fire at an industrial site near a state-owned weapons factory in September.

Romania’s Intelligence Service said on Monday that the blaze in the central city of Brasov on September 14 was “part of a wider campaign of sabotage operations coordinated” by Russia amid its full-scale invasion of Ukraine.

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The agency said the operations were aimed at arms manufacturers and “other targets of military and industrial interest”.

“These actions are intended to intimidate, undermine defence capabilities and weaken the contribution of the targeted states to European and regional security,” it said in a statement.

There was no immediate comment from Russia on Romania’s claim. Moscow has previously repeatedly denied such accusations.

Romania’s Directorate for Investigating Organized Crime and Terrorism, known as DIICOT, said three people had been involved in the Brasov fire – two Belarusians and a Ukrainian, all living in European Union countries.

Two were “tracked down and remanded in custody in Germany while they were preparing to commit similar offenses”, the directorate said.

The third remains at large in Poland.

 

According to Romania’s Intelligence Service, recruits for such networks are often found on social media and are first offered money “for a seemingly harmless task”, such as “observing or photographing certain targets”.

Over time, “the tasks become increasingly serious, potentially involving acts of vandalism, arson or even murder”, it said.

‘Hybrid’ war

Romania, a member of the EU and NATO, shares a border of more than 600km with Ukraine.

Its centrist president, Nicusor Dan, has said the country is a target of a hybrid war that Russia is waging to destabilise nations backing Kyiv, citing drone incursions into Romanian airspace, cyberattacks, disinformation campaigns and sabotage.

Foreign Minister Dan Neculaescu said the fire in Brasov was “part of a broader campaign of sabotage across Europe” targeting military production.

“Hybrid attacks will not hold us back from strengthening our resilience and defense,” he wrote on X.

The accusation follows a string of incidents at defence sites across Europe in recent weeks.

In September, explosions and a fire erupted at an ammunition storage site in Bulgaria, weeks after a blaze at another munitions facility in the country. Both sites are operated by the Bulgarian arms maker EMCO, whose munitions are used in Ukraine.

That same month, firebombs were thrown near the offices of a defence company in Munich, and Romanian authorities said they had detained a Russian citizen accused of filming and photographing military sites in preparation for sabotage.

In August, a blast struck an ammunition factory near Rome in Italy operated by the arms maker KNDS.

At sea, at least eight cargo ships have been hit off the coasts of Romania and Bulgaria over the past three weeks, and about 34 sailors have been reported dead or missing.

Dan, the Romanian president, has called the attacks on ships in Romanian waters “a new example of the tragic consequences of Russia’s aggression against Ukraine”.

A year ago, Poland and Romania also detained eight people suspected of taking part in a Russian plot to send exploding parcels to Ukraine.

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Flight from Israel makes emergency landing in Bulgaria after bomb threat | Aviation News

Crew of Austrian Airlines flight OS82 decides to land in Sofia after receiving bomb threat, Bulgarian authorities say.

An Airbus A320 flight from Tel Aviv to Vienna has made an emergency landing in Bulgaria following a reported bomb threat, according to the Bulgarian Ministry of Transport.

Austrian Airlines flight OS82 was near the border with Romania when the crew received a bomb threat and decided to land in the Bulgarian capital, Sofia, the Transport Ministry said in a statement on Sunday.

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Bulgaria’s Ministry of Defence said an air force MiG-29 fighter jet escorted the plane to Sofia airport.

Initial information showed the aircraft carried six crew members and 51 passengers, all of whom have all since disembarked, according to the Transport Ministry’s statement.

The airline told the AFP news agency that a security search of the aircraft was conducted.

“Once the search of the aircraft is complete, the passengers will be rebooked onto alternative flights as quickly as possible,” the airline said.

A crisis response team has been set up, and relevant authorities have launched an investigation into the incident, the Bulgarian Transport Ministry said.

According to aviation and flight tracking site FlightAware, Austrian Airlines 82 left the Ben Gurion airport in Tel Aviv on Sunday at 6:46pm local time (15:46 GMT) and landed about three hours later at Vasil Levski airport in Sofia at 9:43pm (18:43 GMT).

Flightradar24 data showed it entered Romanian airspace at about 9:10pm (18:10 GMT) before turning south and heading back towards Bulgaria.

Information from the flight-tracking platform ADS-B Exchange indicates the aircraft was transmitting squawk code 7700 – a signal for a general emergency – at around the same time.

Flydubai incident

Last month, a Flydubai plane carrying 174 passengers was on its way from the United Arab Emirates to Tel Aviv when a co-pilot allegedly attacked the pilot with an axe in an attempt to crash the plane.

A plane, carrying passengers who were on the FlyDubai aircraft bound for Israel from the United Arab Emirates, which was diverted to Saudi Arabia following an emergency signal, on the tarmac as it arrives at the Ben Gurion International Airport, in Lod, near Tel Aviv, Israel, September 30, 2026 [Ammar Awad/Reuters]
A plane carrying passengers who were on the Flydubai aircraft bound for Israel from the United Arab Emirates, which was diverted to Saudi Arabia following an emergency signal, arrives at the Ben Gurion airport near Tel Aviv, Israel, on September 30, 2026 [Ammar Awad/Reuters]

The aircraft plunged about 17,000 feet (5,180 metres) before it was brought back under control by other Flydubai pilots after passengers and other crew subdued the alleged attacker.

The flight was diverted and forced to make an emergency landing at Prince Sultan bin Abdulaziz International Airport in Tabuk, northwestern Saudi Arabia.

Authorities in the UAE said the co-pilot was on a “suicide” mission to crash the plane at Israel’s Ben Gurion airport in Tel Aviv.

The co-pilot, Hamam Al-Hammami, an Omani national, has since been charged with terrorism offences in the UAE.

The Israeli government responded to the incident by ordering checks on the identities of all pilots flying into the country.

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At least 7 crew members missing after drone attacks on ships in Black Sea | Russia-Ukraine war

Emergency teams are searching for 7 missing crew after two chemical tankers were attacked in the Black Sea. Fires broke out on the ships after they were hit by suspected Russian drones.

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Bulgaria ends search for missing crew after drone strike sinks cargo ship | Conflict News

Rescuers halt operation off the coast with no survivors found, following a Black Sea attack that also damaged a second vessel.

Bulgarian authorities have ended search operations after confirming no survivors were found following a drone strike that sank a ship off the country’s coast.

Drones hit two commercial vessels early on Tuesday as attacks on Black Sea shipping increase amid an intensifying Russia-Ukraine war. One caught fire, and the other sank.

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“There is no trace of the sailors,” Rumen Nikolov, the head of the country’s Maritime Search and Rescue Coordination Centre, told reporters on Wednesday.

The search stopped late on Tuesday and would not continue, he added.

Eighteen Turkish and Indian crew members were rescued from the ship that caught fire, but the crew members from the vessel that sank remain missing.

Authorities have not said how many people are missing, but according to the Maritime.bg specialised website, 10 people were on board the ship.

Nikolov said the ⁠incident occurred in a so-called “responsible search and rescue zone” and not in the country’s territorial waters, which extend to 12 nautical miles off the coast.

“What was found from the sunken ship was one overturned boat, three life rafts and debris from the ship’s equipment that was floating on the surface of the sea,” he said.

Asked whether any debris from the drones had been recovered, Nikolov said: “I have no information about drone debris.”

Prime Minister Rumen Radev has described the attack as “absolutely unacceptable”.

European Union chief Ursula von der Leyen has also condemned the incident.

Bulgarian authorities have said they are not yet able to determine the origin of the drones.

A distress beacon signal from the ship that sank was received at 2:54am on Tuesday (23:54 GMT on Monday), while the distress signal from the other ship was received at 3:23am (00:23 GMT), Nikolov said.

Both commercial ships were managed by Turkiye-based companies, according to the Equasis merchant shipping database.

They were hit about 80 nautical miles (150km) east of the Bulgarian coastal town of Byala.

The strikes came a day after another ship caught fire and sank off the Romanian coast on Monday, killing two people. Ukraine blamed Russia for the drone attack.

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