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moldova

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  MOLDOVA

REPUBLICAN REFERENCE

Area (sq.km)
33,843

Population
4,431,570

Principal
ethnic groups

Moldovans 64.5%
Ukrainians 13.8%
Russians 13.0%

Capital
Kishinev
(Chisinau)

Currency
Leu (plural: Lei)

President
Vladimir Voronin

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Background:
Formerly ruled by Romania, Moldova became part of the Soviet Union at the close of World War II. Although independent from the USSR since 1991, Russian forces have remained on Moldovan territory east of the Nistru (Dnister) River supporting the Slavic majority population, mostly Ukrainians and Russians, who have proclaimed a "Transnistria" republic. One of the poorest nations in Europe and plagued by a moribund economy, in 2001 Moldova became the first former Soviet state to elect a communist as its president.

Update No: 255

Moldova is returning to calm after a crisis earlier this year. The new communist government had to back down on a programme of Russification. In late February students had taken to the streets complaining about the measure to make the learning of Russian compulsory. The education minister resigned. The Moldovans after all are determined to look westwards, not eastwards.
Municipal elections are due on April 7th in which the extraordinary popularity of the communists will be put to test for the first time after the crisis. They won more than 50% of the vote in March 2001 in parliamentary elections and then elected Vladimir Voronin as the president. The performance of the opposition Christian Democratic People's Party, the main opponents of Russification, will be the litmus test of the popular mood here.
The republic has one of the most seriously afflicted of the post-Soviet economies, down to a third of its 1991 level. It suffered a civil war in 1992 that effectively saw its most developed region, the TransDnestr province on the left bank of the River Dnestr, secede, with its largely Russian and Ukrainian population. This was a heavy blow to the economy, plagued by the other usual post-Soviet maladies already, cronyism among a corrupt elite, gross red tape and a residue of attitudes hostile to a market economy. The US and the EU welcomed the communist victory, for there is a chance that the new regime would not be as corrupt as its predecessors.
As a son of Trans-Dnestr himself, with a Russian origin, Voronin sees himself as the one man who might re-unite the country. At first his idea was to stand in elections against the entrenched and thoroughly corrupt leadership of Trans-Dnestr under its president, Igor Smirnov. He wisely refrained from that, for while Moldova may be democratic, Trans-Dnestr is only in name. Smirnov won 85% of the vote in being re-elected on December 9th, his people of course counting the votes!
What Voronin did instead was to make conciliatory gestures towards the Russians, re-introducing Russian into the school curriculum as a compulsory subject (as is Romanian, the language of 70% of Moldovan citizens). There were protests in Chisinau against this move by supporters of right-centrist parties attached to the Romanian heritage of Moldova. Then came the student protests in February and the government's backdown. Russian is not to be compulsory after all.
Voronin's other line of approach to heal the feud with Trans-Dnestr has been to use the good offices of Russia. His intermediary here is Russian First Deputy Foreign Minister, Vyacheslav Trubnikov. But the intransigence of Smirnov is making it difficult to conduct negotiations.
The one really effective way to lure the Trans-Dnestrians back would be to get the economy moving in the right direction - poverty and unemployment are the key problems.
Voronin's high standing in the West is a trump card. It is not just a question of aid and credit, although the World Bank and IMF are now closely involved, but of attracting foreign investment to what is in natural terms a rich country, the orchard of its part of Europe. Paradoxically, it may be the modern communists who purge Moldova of the ills of old-style communism and anchor their country to the West. 

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ENERGY

Moldovan, Russian premiers discuss energy transit in Moscow

Prime Minister Vasile Tarlev has said on his return from Moscow that he had discussed only economic issues with his Russian counterpart, Mikhail Kasyanov, including economic cooperation between the two countries and bilateral trade prospects, Basapress News Agency has reported. Tarlev said at a press conference that he discussed with Kasyanov the possibility of gas transit through Moldova and its amount, imports of electricity from Russia at advantageous prices and possible electricity transit to Romania and Bulgaria. 
The two prime ministers reached an understanding to modify the Russian-Moldovan gas agreement by eliminating state guarantees. Tarlev said the agreement would be modified after the international financial bodies review its text. Tarlev was satisfied with the level of trade between the two states. He said Moldovan exports to Russia exceeded imports by 43 per cent.

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FINANCIAL NEWS

World Bank concerned about reforms on Moldovan economy

The World Bank is concerned about the latest changes in the Moldovan government, above all the dismissals of Deputy Prime Minister and Economy Minister, Andrei Cucu, and Finance Minister, Mihai Manole, World Bank representative in Moldova, Carlos Elbrit, said in an official press release.
The dismissals of the two key ministers are alarming at a moment when Moldova is in need of intensive dialogue with donors and lending organisations, Interfax News Agency reported citing the Bank document. The World Bank is looking forward to the soonest possible appointment of new ministers to make sure that the Cabinet team can work efficiently, it said. Elbirt also said certain initiatives by the ruling Party of Communists, which could hamper the progress of earlier reforms, also arouse certain concerns. Among these initiatives are the parliament's establishment of a commission supervising the National Agency for Energy Regulation and the intention of the Communists to nationalise 25 enterprises without clearly explaining how exactly this is to be carried out, the document said.
The World Bank official expressed hope that the ruling party would take this statement into account, for the World Bank can allow the extension of the SAC-III loan by the end of February only if the situation is improved. If the SAC-III loan is approved, the World Bank could additionally invest US$75m in Moldova within the next 12 months, the news agency quoted Elbirt as saying. The money should finance a number of projects in agriculture, energy, water supply, and territorial enhancement, as well as reforms of local public administrations and the modernisation of the country's Customs Department.

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FOREIGN LOANS

NTMK to receive US$12m credit

Nizhny Tagil Metallurgical Combine (NTMK), a major steel works from Russia's Sverdlovsk region, is to receive a syndicated loan of US$12m from Eurobanque of Paris, New Europe reported recently. 
Eurobanque, which is controlled by the central bank of Russia, will organise the credit and Russia's state-owned Gosincor-Holding investment corporation will guarantee it and act as a liaison with the foreign banks, Gosincor-Holding Senior Vice President, Sergei Panin said. NTMK, for its part, said the credit would be used to upgrade capacity.

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FOREIGN LOANS & AID

Moldovan premier optimistic about IMF assistance resumption

Moldovan Prime Minister Vasile Tarlev believes that talks with the IMF and the World Bank will end successfully, ProTV has reported. 
Tarlev said: "I can say now that we have a confirmation that the IMF has no more objections to the [Moldovan-Russian] gas supply agreement. The problem has been resolved. There are now only organisational points such as the adoption of the Civil Code. The IMF put forward three demands. The first is eliminating the misunderstanding over the gas supply agreement, the second is the adoption of the Civil Code by the parliament and the third is the consent of the World Bank."
The IMF had previously expressed concern at the Moldovan-Russian gas supply agreement. The IMF believes that through this agreement the government guarantees the debts of Moldovagaz [Moldovan gas company]. At the same time, under the memorandum signed by the two sides [Moldova and the IMF], the Moldovan government committed itself not only to taking over any debts of economic agents. The IMF promised to resume its financial assistance for Moldova on condition that the gas supply agreement is amended. Chisinau promised to sign an additional agreement with Russia and said recently that a compromise on the issue had already been reached with Russia.
An IMF mission is now in Chisinau to assess how Moldova is fulfilling the commitments undertaken. The resumption of foreign assistance depends on the results of this check.

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FOREIGN ECONOMIC RELATIONS

Russia pledges to help Moldova's reforms

Russia will help Moldova achieve a greater economic balance and solve "problems which are being experienced by this country temporarily." This was announced by Russian Prime Minister Mikhail Kasyanov after talks with his Moldovan counterpart, Vasile Tarlev, ITAR-TASS News Agency has reported.
The country is still suffering from "a rather high foreign debt." The Russian head of government thinks that "additional measures should be taken" aimed at solving this problem. According to Kasyanov, talks with the World Bank and the International Monetary Fund could help solve the problem. 
Kasyanov sees the fact that Moldova has increased its tax collection as a positive step. According to Kasyanov, this measure would allow the country to achieve a stable increase in budget receipts in the future. Kasyanov added that Russia for its part would help Moldova in making its economy more balanced. 
The Moldovan prime minister expressed the hope that the Paris Club would help his country solve the problem of the foreign debt. He said that it was pointless to discuss "any cooperation with the Paris Club" without a programme on cooperation between Moldova and the World Bank and the International Monetary Fund.

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MINERALS & METALS

Canada, Russia in metals deals

Canadian company, Hatch Associates, has signed a deal with the Siberian-Urals Aluminium company (SUAL) on developing an aluminium complex in Komi, reports New Europe. 
Hatch Associates and SUAL signed another agreement on the construction of a new bauxite enrichment plant in Komi worth US$400,000, which will be wholly financed by Hatch Associates. Meanwhile, Canada's Export Development and Russian diamond monopoly, Alrosa, signed a memorandum of understanding on insuring Canadian exports for Alrosa.

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