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Impoverished Romania fails to use EU funds

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(BRASOV) - Joining the European Union unlocked billions in aid for Romania, among the continent's poorest countries, but five years on the central city of Brasov is still waiting for a new highway seen as vital for its ambitions to become a business hub in the heart of the Carpathians.

"I meet lots of investors who would like to start a business here but they give up because our city is too hard to reach", Brasov Mayor George Scripcaru told AFP.

The 170-kilometer (106-mile) journey from the capital Bucharest can take several hours on a two-lane mountain road infamous for its traffic jams.

A multi-lane highway stops 100 km south of the city of 230,000 inhabitants.

Brasov's plight highlights Romania's incapacity to take advantage of EU funds to upgrade its infrastructure and catch up with richer member states.

So far, the former Communist nation has used only 9.7 percent of the 20 billion euros ($26 billion) made available by the European Commission for the 2007-2013 period, the worst performance in the bloc.

Incompetence, stuffy bureaucracy and cronyism are to be blamed, experts say.

A report by the prime minister's office showed that around 30 EU-funded highway and national road construction projects got delayed because private contractors did not have enough workers or equipment.

The state-owned road company also failed to pay them, delaying the works.

"Bureaucratic procedures to access EU funds are also absurd", Septimiu Parvu, the deputy head of Pro democratia think tank, told AFP.

Gheorghe Damian, the mayor of Ciugud, a village in central Romania, experienced a true nightmare when he applied for EU money to finance a sewage system.

"To launch the tender, we needed the approval of three different administrations which could not agree among themselves on the terms", he told AFP.

The European Commission this year interrupted payments for four programmes in the transport, competitiveness, human resources and regional policy areas because of irregularities in the way projects were managed.

The director of the anticorruption agency (ANI) Horia Georgescu last month warned against numerous conflicts of interests between beneficiaries and officials.

But for the European Affairs Minister Leonard Orban, a former EU commissioner, "fraud is not the main issue".

"There is a lack of competence among civil servants and beneficiaries to deal with these complex EU projects", he pointed out in an interview with AFP.

"We have made some changes within the agencies dealing with EU funds and the situation should improve", he added.

Brussels is expected to unblock some payments this month.

Since Orban became minister last year, the absorption rate grew from 4.0 to almost 10 percent.

But Romania risks losing about 6.7 billion euros if it fails to use at least 40 percent of the European structural funds it has to apply for by December 2013, Orban said.

The money will then go back to the member states.

Romania however is not the only country lagging behind in Europe.

In Italy, substantial EU funds have also not been sufficiently accessed, particularly in impoverished southern parts of the country.

Prime Minister Mario Monti's government has made considerable progress but Territorial Cohesion Minister Fabrizio Barca last month warned that Italy risked losing 3.5 billion euros in structural funds it has to apply for by December.

When EU leaders gather in Brussels on Thursday to thrash out the bloc's budget for the 2014-2020 period, Orban says cohesion funds should not be cut.

In Western Europe "thousands of jobs are lost because firms move to Eastern Europe. Romanian doctors and nurses leave to Western Europe to earn better salaries. We can only stop this if we bridge the differences between our countries," he argued.

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