NICOLAE CEAUSESCU’S AUSTERITY POLICY OF THE 1980S: CAUSES, IMPLEMENTATION AND

CONSEQUENCES

While Romania’s adventure with Communism is not exactly unique, what makes it impressive
is its longevity and orientation changes considering how it came to power. One of the reasons
the longevity of the Communist regime is short of a miracle is the fact that the PCR ( the
Communist Party of Romania) was not only a young party – created in 1921 but it was also
rather unpopular with little over 1000 members, the majority of which were not Romanian
ethnics, but members of the various minorities. The ethnicity of the members matters because
at the time, Romania was a recently unified country in which a nationalist ideology was
developing and the different nationalities living on the territory were not always friendly, which
in turn brought tensions inside the party. Moreover, the PCR was a branch of the Communist
International (Comintern) whose directives it followed; its main priority was not territorial
integrity and independence of the country but following Moscow’s orders. Thus, starting 1924,
the PCR was outlawed and many of its members were imprisoned or they migrated towards
the USSR. It would take the end of the Second World War and the involvement of the Soviet
Union to bring the Communists out of illegality.

Under the threat of losing more territories, with the Soviet troupes in the country and with
pressure from Moscow to include Communists into the government, the PCR gradually took
control of the country. Starting in 1945 with the nomination of Petru Groza as Prime Minister,
followed by falsified elections won by the Communists in 1946 together with the abolition of
the monarchy on 30 December 1947, the Communists took control of the country and
proclaimed the People’s Republic of Romania. From then on, under the guidance of leader
Gheorghe Gheorghiu-Dej, the regime annihilated the opposition (PNT – National Peasants’
Party, and PNL – National Liberal Party) and all possible rivals to their power. Progressively
the PCR tried to distance itself from Moscow both politically and mostly economically; in fact,
while ideologically there was no difference, they wanted to be in charge of their own policy
without following directives from the Comintern. Economic distance was deeper because
among the countries part of CMEA (Council for Mutual Economic Assitance), Romania was
supposed to remain a strictly agrarian country, however, the Romanian leadership refused this
destiny and started a process of forced industrialization focused mostly on heavy industry.
Despite Soviet plans for Romania, the reality was that economically speaking Romania was an
agrarian country with the majority of the population living in the countryside and dealing with
agriculture. The little industry there was it was not in the hands of Romanians, instead it was
in the hands of Jews, German citizens and Hungarians.
Nicolae Ceausescu obtained the leadership of the Party through behind the scenes maneuvering
and neutralizing potential candidates to the leadership, after Gheoghiu-Dej’s death in 1965. He
inherited and kept most of his predecessor’s policies – promoted a forced accelerated industry,
focused mostly on heavy industry, he continued the line of independence from Moscow, while
at the same time he started consolidating his own power in the Party. In addition, he started to
promote a foreign policy of tolerance and peace, trying to have as many relations with the West
as possible. He became well-known in the West particularly after 1968 when he condemned
vociferously the invasion of Czechoslovakia by the other Warsaw Pact members. From that
point on he became famous for openly opposing the USSR; and the economic benefits were
sure to come – both in terms of credits from the West and in terms of negotiations and in a way
liberalizations of trade with these countries.
The economy was mostly focused on heavy industry, particularly petro-chemical one and steal
industry. Huge industrial clusters were built and huge quantities of raw materials were
consumed, particularly oil and coal. While the 1970s saw a certain boom of the economy, a
great urbanization and a certain wellbeing for most of the factory workers; at the end of the
1970s the economy started to stagnate and show the first signs of trouble. The collapse of
Bretton Woods, the second oil shock and the rise in oil prices followed by the peak of national
extraction meant importing high-priced oil in order to keep the industry going. The lack of
national funds meant borrowing from abroad, however in those years the interest rates were
huge, therefore, the foreign debt kept growing. Eventually the way to pay for all the imports of
raw materials was that of reducing to zero the other imports and forcing exports. The austerity
policy implemented meant less food for the population, scheduled energy and heating for the
population in order to save energy for the industry. The austerity policy started causing doubts
in the West about Ceausescu actual policy, thus many started pressuring for human rights and
other liberties; which in turn made the regime even more closed and starting to see any foreign
suggestion as interference with internal affairs. The solution to stopping this perceived
interference with internal affairs was that o deciding to repay all foreign debt – which was seen
as the means through which other states were trying to force Ceausescu’s hand.
Many consider the austerity policy was due to Ceausescu’s personality cult, others blame it all
on the faulty economic system of the communist world. While taking into considerations all
possible opinions on the issue of foreign debt repayment and of the austerity policy that came
with it, this paper’s objective is that of analyzing the causes, implementation of the policy and
its consequences while at the same time focusing on the international environment in the 1980s.
In fact, my intention is that of showing how considering the international environment at the
time, together with internal causes (be them natural disasters or faulty economy) there was very
little possibility of maneuvering in other directions other than the one taken by Ceausescu.
With the benefit of hindsight it is possible to realize that in order to keep his regime, he had no
other choice considering that the world around him was changing – the West was passing in
the post-industrial era, while the USSR was ceasing to be the boogieman once Mikhail
Gorbachev started promoting perestroika. Furthermore, the high cost of keeping the industry
going, the natural disasters of late and the continued worsening of the living conditions, the
end result meant that there was no alternative if you wanted to maintain the regime as it was.
In order to support my theory I will use a wide range of books, scientific articles, primary
sources when possible, interviews, recordings of speeches and official statistics.