MOLDOVA
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Moldova
Moldova, officially the Republic of Moldova is a landlocked country in Eastern Europe located between Romania to the west and Ukraine to the north, east, and south. The capital city is Chișinău. The country declared itself an independent state with the same boundaries as the Moldavian Soviet Socialist Republic in 1991 as part of the dissolution of the Soviet Union. On July 29, 1994, the new constitution of Moldova was adopted. A strip of Moldova's internationally recognised territory on the east bank of the river Dniester has been under the de facto control of the breakaway government of Transnistria since 1990.

Since the collapse of the Soviet Union, the relative weight of the service sector in the economy of Moldova started to grow and began to dominate the GDP (now about 63.5%), as a result of decrease in industry and agriculture. However, Moldova remains the poorest country in Europe. The country is a parliamentary republic with a president as head of state and a prime minister as head of government. Moldova is a member state of the United Nations, Council of Europe, WTO, OSCE, GUAM, CIS, BSEC and other international organizations. Moldova currently aspires to join the European Union, and has implemented the first three-year Action Plan within the framework of the European Neighbourhood Policy (ENP).

 

EU report: the Republic of Moldova advances in reform implementation but considerably more progress is needed

Brussels, 5 April 2018

The Republic of Moldova has advanced with the implementation of some reforms, but further action is still required for its citizens to reap the full benefits of the Association Agreement.

The Republic of Moldova has managed to stabilise its economic situation and, with constant but conditional support from the European Union and other international partners, has progressed with the implementation of some reforms, including strengthening the Deep and Comprehensive Free Trade Area (DCFTA). Further efforts, however, are still needed in particular in order to address high level corruption, recover the misappropriated funds from the one billion dollar banking fraud and bring to justice those responsible for the fraud. A thorough reform of the judicial system is also to be addressed. The details are highlighted in a joint report, released today by the European External Action Service and the European Commission.

EU High Representative for Foreign Affairs and Security Policy/Vice-President of the European Commission, Federica Mogherini, said: "We have a comprehensive agenda with the Republic of Moldova, working to improve our economic links, increase trade and therefore bring jobs, to strengthen democracy, human rights and support for civil society and its important role in keeping the government and the political leadership accountable. Some reforms have recently advanced, in business and financial areas, for example, and further progress is needed in other areas, notably the fight against corruption and reforming the judiciary.

 
Our support to the people of Moldova is clear and we expect satisfactory reform progress by the authorities, which would bring tangible benefits for Moldovan citizens."

"The European Union is Moldova's main trading partner and over the past year trade between us has further increased," added Commissioner for European Neighbourhood Policy and Enlargement Negotiations, Johannes Hahn. "Since the Association Agreement including the DCFTA entered into force, the EU's share in Moldova's exports has increased and accounts now for more than half of Moldova's total trade. The EU has helped to create over 1,500 jobs through support for the small businesses. This is just one of many examples showing why the EU matters to the Republic of Moldova and why our partnership is beneficial to the lives of its people. To fully reap the rewards of our Association Agreement, Moldova needs to keep on implementing further reforms, without delay."

The joint report published today in line with the new approach to country reporting under the revised European Neighbourhood Policy (ENP), presents the implementation of the Republic of Moldova's commitments under the EU-Moldova Association Agreement since the last meeting of the EU-Moldova Association Council on 31 March 2017, especially those included in the revised Association Agenda agreed in August 2017. It emphasises the close political dialogue between the two partners at all levels, enumerates examples of the new laws adopted in the period concerned as well as outlines the main challenges that need to be swiftly addressed by the Moldovan government.

The Republic of Moldova has also continued to reform its banking sector, supported by the EU and international partners such as the International Monetary Fund (IMF) and the World Bank. As a result, notably of these reforms, the IMF agreement is on track.

 
The economic growth registered in 2016-2017 had a positive impact on trade. Moldova has made progress in aligning its legislation on trade matters to EU regulation and standards, but also here significant further efforts are required.

The Republic of Moldova has also continued to reform its banking sector, supported by the EU and international partners such as the International Monetary Fund (IMF) and the World Bank. As a result, notably of these reforms, the IMF agreement is on track. The economic growth registered in 2016-2017 had a positive impact on trade. Moldova has made progress in aligning its legislation on trade matters to EU regulation and standards, but also here significant further efforts are required.

On democracy, human rights and good governance, the report recalls that the change of the electoral system in July 2017 went against the recommendation of the Council of Europe's Venice Commission and the Office for Democratic Institutions and Human Rights of the OSCE. The necessity to ensure inclusiveness in the electoral process ahead of the parliamentary elections in autumn is underlined. The report also stresses that corruption, including high level corruption, still remains widespread and the independence of justice, law enforcement as well as national anti-corruption authorities need substantial improvement.

A number of achievements, including examples of several projects that were completed in 2016-2017 with EU assistance and which directly improved citizens' daily lives, are highlighted. New business incubators have been established, for example in Calarasi, to boost economic development and create jobs, and the EU has provided grants to migrants returning to Moldova for business purposes.

 

 
The importance of confidence-building measures and the concrete benefits they bring to Transnistria and Gagauzia, such as support for setting up businesses and creating jobs, are also underlined in the report.

The report was published ahead of the EU-Moldova Association Council which is scheduled to take place on 3 May 2018 in Brussels.

Background

The European Neighbourhood Policy (ENP) and its Review in November 2015 give the EU and its neighbours a clear political framework for the coming years with an overall objective of stabilisation. The principles of the revised policy are: enhanced differentiation between partners, a greater focus on objectives agreed with partners, increased flexibility to improve the EU's capacity to respond to crisis situations and a greater ownership by Member States and partner countries.

More information


Daniel Hamilton, partner at Bell Pottinger wrote 10 February 2014:

Moldova is one of the least known and understood corners of Europe.  Even amongst those with a strong grasp of geography, attempts to place the small, landlocked country on a map are met with awkward silences and shrugs of the shoulders. Ironically, it is Moldova’s geographical positioning that lends it such geopolitical significance – at least at the moment. For the uninitiated, Moldova is located on the European Union’s eastern flank, sandwiched in between Romania and Ukraine.  While the residents of the country speak Romanian – and many of its residents freely describe themselves as “Romanians” – Moldova was a constituent part of the Soviet Union rather than independent, communist Romania.  As a post-Soviet rather than a post-Ceau?escu state, Moldova has naturally maintained close links to Moscow since independence and has a mostly bi-lingual, Russophone population.

As such, while Russia has been powerless to stop Romania’s movement towards the European Union – and “the west” in general” – Moldova has remained Russian satellite state for much of its post-independence history. Ever since the collapse of the Soviet Union, the Russian government has pursued a policy of exploiting, fomenting and sustaining internal ethnic conflicts in order to frustrate the ability of former Soviet states to pursue a policy course that is genuinely divergent from that of Moscow. The examples are clear for all to see.

To this day, Russian juntas occupy the Georgian regions of Abkhazia and South Ossetia – an area akin to 20 percent of the country’s sovereignty territory. Russian troops are stationed in both territories, forcibly preventing the country’s reunification. Prior to 2004 a third region, Ajara, was also under control of Kremlin-backed stooge Aslan Abashidze. For more than twenty years, possession of the ethnic Armenian enclave of Nagorno Karabakh has been bitterly disputed by Armenia and Azerbaijan. Russia has repeatedly exploited the frozen conflict for its own ends; holding back Armenian wishes for closer links with the EU by threatening Yerevan with increased arms sales to Azerbaijan.

In the case of Moldova, a narrow strip of land on the country’s eastern border with Ukraine, home to roughly 500,000 people, has since 1992 been administered separately from the rest of Moldova as the self-proclaimed Pridnestrovian Moldavian Republic – or Transnistria, as it is more often known. In terms of ethnic composition, Transnistria has a plurality of Moldovans (or ethnic Romanians) at around 40 percent of the population, yet is a minority compared to the 55 percent or so of the population that are either ethnic Ukrainian or Russian.

In 1992, fears of ethnic-Romanian hegemony in the newly-independent Moldova spilled over into ethnic conflict with remnants of the Russian-aligned Soviet Army’s 14th Guards Battalion siding with ethnic Russians to drive out Moldovan forces.  Since that day, Transnistria has been under the de facto controlled of Moscow. Residents all receive Russian passports and the region is heavily subsidised in terms of low-cost energy and bungs to prop up unreformed Soviet-era industries. On the face of it, Russia has little to gain from supporting the separatist forces in Transnistria.  The suggestion that the involvement of the Soviet Army in the 1992 conflict – or the continuing presence of more than 1,000 Russian soldiers stationed in the territory – was for peacekeeping reasons or to prevent ethnic conflict is specious to say the least. In reality, the purpose of the ongoing Russian presence in Transnistria has been twofold; first, to ensure the survival of a military presence in the region and secondly, to frustrate Moldova’s movement towards the west. Until now, the Russian position has been an effective one.

Transnistria’s shelf-life as a potent political pawn is, however, running out. Recent history is littered with numerous attempts by Moldova to reach an amicable agreement with Russia on the status of Transnistria. Each of these attempts has failed. Frustrated by the country’s crushing poverty and perturbed at being cut off from the regional development assistance and market access opportunities provided to its sister nation Romania inside the EU, Moldova has opted to pursue a different political course.

In November, the government of Prime Minister Iurie Leancă inked a wide-ranging free trade deal with the European Union that will effectively sever the country’s political ties to Russia. As part of the deal, Transnistria will no longer be able to enjoy the benefits of trade deals that Moldova is a signatory to. Up to now, Russian-owned manufacturing conglomerates in Transnistria have been able to gain preferential access to European markets by labelling their products as having been manufactured in Moldova.

Leancă has taken a gamble.

On one hand, denying the breakaway region access to the privileges associated with trade with the European Union could lead to a popular uprising calling for Transnistrian reintegration into Moldova. On the other, the Russian government may opt to step in and plug the 40 percent gap left in the breakaway territory’s finances by ending preferential trade, leaving it even more dependent on Russia. It is clear that, while Leancă would prefer the former outcome to the latter, he and the Moldovan people can live with either. Vladimir Putin and the broader government of the Russian Federation now recognise that.

While the Transnistria issue will effectively be left to play itself out, more pressing concerns exist in relation to the 160,000-strong Autonomous Territorial Unit (ATU) of Gagauzia in the south of Moldova. Scarred by the Transnistria conflict and scared of a repeat of ethnic violence in the country, an agreement was reached in 1994 to give ethnic Turkic (yet Orthodox Christian) citizens of Moldova a degree of independence inside the state. Unlike Transnistria, which forms a cohesive territorial unit that is physically divided from the rest of Moldova by the River Dniestr, Gagauzia is comprised of a series of enclaves that possess the right to pursue its own education, linguistic, social security and justice policies separately from the rest of Moldova. The areas under the control of the Gagauz AUT, which is fully enshrined in the Moldovan constitution, possess one administration yet take the form of effective bantustans surrounded by “ordinary” ethnic Moldovan areas.

The autonomy granted to Gagauzia is fast becoming a serious problem for Moldova – and a tool to be exploited by a Russian government vehemently opposed to the country’s move towards EU membership. On February 2nd, a non-binding referendum took place in the territory in Gagauzia in which residents were asked to vote on whether they supported Moldova’s participation in the EU trade deal signed by Leancă or whether they would back participation in a Russian-led Customs Union. Ninety-eight percent voted in favour of the Customs Union, rejecting closer western links. The reasons for such a strong vote in favour of the Customs Union demand examination.

Historic concerns exist in among ethnic Gagauz regarding the possibility of overwhelmingly ethnically-Romanian Moldova seeking to federate with neighbouring Romania, a move that would see the end to the region’s autonomous status.  Such a situation would see the uniquely Turkic yet Christian Gagauz minority subsumed into a state where they enjoyed no minority privileges. Such concerns, however, fly in the face of the successful functioning of autonomy for Gagauzia for the past two decades, the Moldovan constitution, explicit denials of the suggestion by Prime Minister Leancă and statements from the EU Enlargement Commission Štefan Füle that unification would not be tolerated by Brussels.

Ethnic politics – whether in the Balkans, Carpatians or Caucasus – is an explosive issue. For that reason, the scale of Moscow-led interference in the Gagauzia is of profound concern.

In recent weeks, a number of members of the Russian State Duma including ultra-nationalist MP Roman Hudiakov have visited the region in order to advocate Gagauzian secession from Moldova.  During his trip to the region, Hudiakov participated in joint rallies with pro-Customs Union Communist MP Igor Dodon in which he called for the outright rejection of the EU trade deal on the basis that it would lead to ethnic Romanian hegemony in the country and membership of the Russian Customs Union. On January 31st, a team of Russian security service agents were detained and refused entry into Moldova at the Palanca border crossing in the south west of the country following evidence that the agents were working on campaigns to ferment ethnic unrest in Gagauzia.   The referendum that took place on 2nd February, that was judged to be illegal under the terms of the Moldovan constitution, was openly financed by multi-millionaire Yuri Yakubov, a close associate of the Russian Defence Minister Sergei Shoigu

It is clear that, with the issue of Transnistria lacking the potency and hold over Moldova that it once had, the Russian Federation is pursuing actions designed to ferment ethnic unrest in the very heart of Moldova.  Russia knows that, if Gagauzia was to either unilaterally declare independence or take up arms against the institutions of the central government, the very viability of Moldova as an independent state – let alone a future EU member – would be at risk. The actions of the Russian government and its allies in the region are intolerable and cannot be met with silence from Western European powers. If Moldova is to complete its transition from failed Soviet state to market economy, urgent support is needed to bolster the country from external forces adamant it must remain aligned to Moscow.

As a starting step, financial assistance should be provided to Prime Minister Leancă’s government to ensure public services and transport infrastructure in Gagauzia is upgraded in in a show of commitment to the region. If this is not done, the Russian Federation will likely seek to replicate the significant investments already made in Transnistria. It is also important that the Leancă government take measures to ensure that ethnic Gagauz feel part of the Moldovan state as opposed to an inconvenient addition to it.  A starting point in this regard may be the appointment of members of the community to strategic roles in the country’s Cabinet of key concern to the Gagauz – possibly with responsibility for infrastructure and agricultural concerns.  Such a move would be a powerful confidence-building measure.

Similarly, senior governmental and civil society figures from across the European Union must visit the region in order to directly respond to the burlesque propaganda that has been perpetuated by supporters of Russia’s Customs Union. In particular, specific promises should be made to defend Gagauz autonomy, matched with pledges to ensure preferential markets are found for the region’s agricultural goods and textiles.

The adoption of each of these measures would be a strong start to countering threats to Moldova’s sovereignty and stability.

Across the border from Moldova lies Ukraine. If the experience of the past months has taught us anything, it is that the Russian Federation and Vladimir Putin are willing to fight for what they believe is theirs. It’s high time that Western democrats responded in similar terms – by defending Moldova’s independence – and its future.