Property restitution has constituted a divisive method of working through Romania’s multiple pasts: communist, fascist, and more generally pre-communist. Successive post-communist governments of all ideological persuasions have been unwilling to right past wrongs, generating instead a series of new injustices and consolidating impunity through commission and omission. The recent Democrat Liberal proposal to discontinue restitution in kind and cap financial compensation packages to 15 percent of the property market value represented a last-minute attempt to address a systemic problem identified eighteen months ago by the European Court for Human Rights. Proposed just days before the cabinet of Prime Minister Mihai Razvan Ungureanu stepped down for losing the confidence of parliament, the proposal raised more questions than it solved.
Confiscations, nationalizations and expropriations without due compensation affected land, factories, dwellings, churches and chapels, religious objects, gold coins, jewels, art objects, bonds, bank accounts, and other assets. Of these, the dwellings have been the most disputed, and the object of most complaints addressed by initial owners to the European Court. After the collapse of the communist regime, the ruling Social Democrats (heirs to the conservative faction of the Communist Party) made it clear that restitution in kind was to be the exception, not the rule of their transitional justice program. The official reason was that returning dwellings to initial owners reconstituted pre-communist social divisions, something that had to be avoided as seemingly incompatible with the new democratic order. The real reason was more mundane, since many Social Democrats occupied abusively confiscated dwellings for meager rents. In 1995, tenants were allowed to buy the dwellings they occupied at a fraction of market value. While the right to use usually derives from the right to own, in Romania the right to own derived from the right to use. The recently proposed legislation did little to rectify this anomaly.
After the 1996 elections, leaders of the ruling Democratic Convention and its junior partner, the Democrat Party, hastened to gain access to the most desirable dwellings, by sometimes evicting Social Democrat dignitaries and other times accepting them as neighbors. The Convention included the historic Liberal and Peasant Parties, while the Democrats were the heirs to the Communist Youth League and the reformist faction of the Communist Party. Transactions allowing tenants to buy ‘in good faith’ abusively confiscated properties were recognized as legally valid. The only improvement was that initial owners were permitted to approach the Romanian courts, a constitutional right the Social Democrats had stubbornly denied them. That courts could pronounce verdicts in restitution cases was a step forward from 1990-1996, when the government and the Prosecutor General considered that only parliament was entitled to settle the issue. Nevertheless, applying a crooked legislative framework could not end injustice. This is why starting in 1999 Romanian initial owners turned to the European Court, which accepted their petitions.
Since then, the European Court has ruled in favor of dozens of Romanian initial owners whose property right, right to approach the courts, and right to due process were blatantly infringed by the Romanian government. The total damages awarded by the Court have reached an estimated 10 million Lei per year, but the final tab could be much higher, since interest is applied when Romanian authorities pay no damages within three months of those damages being awarded. Most of the restitution cases the European Court settled fall into this category. Meanwhile, tenants have continued to use the dwellings at meager rent levels, while the total proceedings obtained from the sale of some of the confiscated dwellings by the state to the tenants ‘in good faith’ have remained remarkably low. In the Romanian case, property restitution has allowed a small group of privileged politicians and well-connected luminaries (actors, bankers, writers, university professors, journalists, and even former tennis players) to appropriate prized historical dwellings while transferring the cost of these transactions to the taxpayers.
In 2010, the European Court launched a pilot-judgment procedure in response to Romania’s lack of progress in resolving the property restitution issue, and the 1,500 nearly identical cases that Romanian initial owners had lodged with the Court. The pilot-judgment procedure signaled that the European Court judges had identified structural legal problems giving rise to repeated violations by Romania of the European Convention of Human Rights. The Court further decided to adjourn examining cases lodged by Romanian owners for eighteen months, pending adoption by Bucharest of measures streamlining and simplifying property restitution procedures and providing adequate redress to all those affected by the reparation legislation. The procrastination has worked against the individual homeowners, many of whom are old persons lacking the financial means needed to continue the legal fight. By late 2010, only 4,000 of the 63,000 property return claims lodged with the National Agency for Property Restitution, the central governmental agency mandated to recognize restitution demands, had been solved.
The Democrat Liberal response to the challenge raised by the European Court was a legislative proposal that addressed almost none of the injustices generated by previous Romanian governments but continued to disregard the initial owners’ constitutional right to property. First, the most important expense associated with property restitution relates to the damages for which the Romanian government incurs interest for not paying in time more than to the market value of the properties. Even if compensation is set to a fraction of the market value, arguably to help authorities meet reasonable compensation targets in times of financial crisis, the damages would continue to skyrocket as long as the government proposes no working payment plan. Money must be paid – all Romanian governments have chosen to cover damages, instead of full compensation. Second, if the Constitutional Court does not strike down the proposal as unconstitutional, then Romanian owners would fall into two categories based on the courts’ abilities to recognize their ownership rights with celerity. Owners whose property rights are recognized by courts before the proposal goes into force will be entitled to full financial compensation or restitution in kind, if possible. Owners whose cases cannot be heard by the courts by the time the proposal goes into force will be entitled to no restitution in kind and compensation of up to 15 percent. Owners would be within their rights to approach the European Court against the Romanian government, this time with complaints about the functioning of the local court system.