Privatization and crisis in Romania at the intersection of global and local forces [Ioana Vlad & Enikő Vincze]

Paper presented at ESA RN15 Second Mid-Term Conference “Which globalization during and after multiple crises?”, 18-19 May 2023, Università Cattolica del Sacro Cuore, Milan

Ioana Vlad and Enikő Vincze presented some of the REDURB results about the relationship between privatization-led deindustrialization and real estate development. The paper focused on the role of privatization in the generation of subsequent crises in the context of the country’s neoliberalization and illustrated this phenomenon in two second-tier cities of Romania, Brașov, and Craiova.

Our paper addresses how the socio-economic crisis of the ’90s in post-socialist Romania, triggered by privatization, enforced via the structural adjustment policies of global financial institutions, contributed to the subsequent crisis in the country while creating sources for capital accumulation. Cases of new real estate development on the privatized and collapsed sites of former state-owned industrial platforms, while the costs of housing, overcrowded homes, and instances of precarious housing increased, illustrate one of the dimensions of the overarching crisis.   

Along with the privatization of land and housing, passing the industry from public to private property was defined as a means of creating a market economy out of state socialism weakened by the crisis of the 1980s and of integrating Romania into global capitalism. However, it contributed to the eruption of a new cycle of crisis during the 1990s, manifested in economic collapse, high unemployment, and inflation. This entailed a devaluation of state-owned enterprises some of which being sold for scrap, to speed up the privatization targets agreed upon with the World Bank, IMF, and the European Commission. In this context, large industrial spaces close to city centers opened up for private real estate development, be it commercial or residential, leading to spatial reconfiguration across cities. In the cities, this economic restructuring was paralleled by a discursive legitimation on the part of the local governing coalition aiming to make or keep the city attractive to businesses and investors.

We illustrate the processes described above through case studies from two formerly heavily industrialized second-tier cities in Romania, Craiova, and Brasov. To that purpose, we retrace the privatization of several former industrial spaces and their subsequent transformation into real estate developments, at the intersection of supranational impositions, national policies, and local practices.