Romania: The Gold Rush is On

Romania’s president could have learned something from King Midas who, according to legend, turned anything he touched into gold. Yet what had at first seemed like a gift, ultimately became a curse. President Traian Băsescu also has gold at his fingertips – and lots of it: Rosia Montana, a state-owned mining area in the Apuseni Mountains in the country’s North West, sits on one of Europe’s largest deposits of the precious metal. But once touched by Băsescu’s privatisation agenda – which brought rioting to the streets of Bucharest in January over healthcare reform – Rosia Montana morphed into a target of popular anger.

For years, the mining region has been on environmentalists’ agenda. But since last autumn, protests have intensified. Activists have rallied in Romania’s major cities – Bucharest, Cluj, Timisoara, and Targu Mures – for spontaneous "flash mob" demonstrations ranging in size between a handful and several thousand. "Your government is robbing you blind! Your media is lying to you! They all want to buy your silence!", demonstrators shout, wearing gas masks and holding up red cards to signal "stop!"

But stop what? The protesters’ immediate target is a bid by Gabriel Resources, a Canadian mining company, to take over the state-owned mines of Rosia Montana. Having lobbied for the licence since 1997, the company hopes the government will finally give the green light. "I support the project as I support any kind of industrial development," Băsescu told the U.S. news agency Associated Press last August.

Rosia Montana – the "Red Mountain" – has a mining history stretching back to the 2nd century A.D., when the area was part of the Roman province Dacia. Today, Gabriel estimates that at least 314 tons of gold and 1,480 tons of silver are still underground. That’s more precious metal than all of the EU’s bullion reserves put together.

But Gabriel stirred controversy by announcing it would use a process known as "gold cyanidation" for the extraction, using a solution containing the toxin cyanide to separate the gold from the rock in an open-cast mine.

"We are fighting against the complete de- struction of the village, against pollution, and the obliteration of our national heritage," rockstar activist Mihnea Blidariu told The Vienna Review. "Not to mention the violation of the right to property of all those locals who do not wish to leave their homes."

The concerns recall the Baia Mare disaster in 2,000, when 100 tons of cyanide seeped from a Romanian mine into Hungary’s Tisza River and the Danube, killing thousands of fish in Hungary and Serbia.

But Gabriel has been adept at countering the accusations. Romanian mines – including Rosia Montana – have been using gold cyanidation for decades. The company claims that its modern technology renders the procedure safer, emulating successful projects in New Zealand, Finland, and on Austria’s Erzberg. Cyanidation will occur transparently, in accordance with the EU’s strict regulations, and the decantation pond will be in- sulated with clay to prevent leakage.

"Why would we invest €2 billion in something we don’t trust?" said spokesman Catalin Hosu of Gabriel Resources.

 

Starving the village to save it

While the assurances have done little to convince the urban activists of "Save Rosia Montana", the locals in the mining village showed few signs of wanting to be saved.

"We’re all miners or miners’ wives here," said Lida Blajan, who was born and raised in Rosia Montana, one of 16 villages in the area with a combined population of 2,600.

"The land is no good for harvesting, we have nothing else. If Gabriel’s initiative is not supported, we would have to relocate anyway, otherwise we would starve," Blajan put it plainly. "The sooner the project is approved, the better."

And the opponents? Out of a total of 185 families in the village, only five oppose the project, unwilling to relocate to the nearby city of Alba Iulia where housing facilities are provided.

What if they continue to refuse should the project be approved? "We would re-open negotiations," said Hosu.

Gabriel Resources would provide 2,300 temporary jobs during construction, and 880 permanent ones when the mine starts operating. In addition, the company has pledged to invest €70 million to restore the region’s historical sites, including some unique Dacian-Roman mining galleries, in an attempt to attract tourists to an area that, so far, has attracted only controversy.

 

A land for opportunists

Not only the miners of Romania’s North West, but also politicians in the capital are looking to Gabriel for their salvation.

In 2009, in the wake of the global financial crisis, Romania entered a sharp recession, reversing its previous growth rate of 7%. To cover its ballooning expenses, including a stimulus package, the government entered a loan agreement with the International Monetary Fund – in exchange for committing to spending cuts and privatisations. While the economy has returned to a slim growth – projected at 1.1% for 2012 by the European Bank for Reconstruction and Development – Băsescu is still determined to reduce the state’s budget deficit from 4.4% in 2011 to 1.9% this year, The Economist reported.

As such, Gabriel’s venture presents a welcome source of revenue: The state would retain 19% of the shares, and has recently raised precious metal royalties to 8% – a high level as most countries levy between 3% and 5% according to the World Bank.

For the protesters, however, Rosia Montana is emblematic of a government that is selling out to the highest bidder, be it to service foreign debts, or, worse, to furnish politicians’ retirement coffers. Large-scale privatisation of state-owned assets generally invites bribery and insider-trading. But in a country as plagued by political corruption as Romania, the risk is particularly acute; even one of the state’s most senior judges, Gabriela Birsan, is currently under investigation for selling favourable verdicts.

"Rosia Montana is just another example of how political decisions are made in Romania," the activist Paul Socol said.

This, in fact, may be the true cause of distress – the dawning sense that, rather than being a land of opportunity, Romania has become a land for opportunists. According to a December poll reported in The Economist, two thirds of the population says they have faced wage-cuts or layoffs.

With parliamentary elections approaching this November, Băsescu will be under pressure to explain the need for the wave of privatisations, and demonstrate that he can carry them out cleanly. Otherwise, like King Midas, he may be poisoned by his gold.