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Area (


ethnic groups

Moldovans 64.5%
Ukrainians 13.8%
Russians 13.0%


Leu (plural: Lei)

Vladimir Voronin


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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 January 2002

At the end of November, Moldova and Russia signed a new treaty of friendship and co-operation in the Kremlin. Curiously enough the bland document signed was highly revealing all the same - for what it did not say. There was no mention of Moldova joining the Russia-Belarus Union, which the Moldovan president had earlier indicated as a goal. Putin perhaps regards the idea as absurd, as is that of the Union itself in all probability. He is aware of the need not to ruffle Ukrainian feelings by encircling Ukraine, a far more important partner for Russia than Moldova.
Moldova really needs to open up to the West, not hanker for the good old Soviet days (when its GDP was more than twice as high as it is now after a catastrophic crunch in the 1990s). On the other hand it has gained little over the last ten years of free market capitalism, little interest having been shown in it by multinationals, except for tobacco. It joined the WTO in June 2001. This should help its wine and tobacco industries to expand their exports into the EU and beyond.
The Moldovan republic is in a defining moment of its history. The country was initially Bessarabia a province of Romania, all of it except that part of it on the left bank of the river Dnestr, which became a key Soviet military base. That province is now TransDnestr, a largely Russian-speaking enclave ruled by hopelessly corrupt relics from the Soviet epoch, who were trying to turn it into a sort of mini-USSR of the corrupt Brezhnev epoch before Gorbachev came on the scene and spoiled everything.
In Moldova proper in April a new president and government from an old party took over, the Communist Party of Moldova. They are not so retrograde, however, as the TransDnestr leaders. The president, Vladimir Voronin, comes from that province curiously enough, but is a sworn enemy of the TransDnestr leaders and is standing in elections just before Christmas to the local presidency, in a bid to re-unite the two halves of his country.

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Chisinau, Moscow sign gas delivery agreements

Russian Prime Minister, Mikhail Kasyanov, and his Moldovan counterpart, Vasile Tarlev, signed an agreement on Russian natural gas deliveries to Moldova and gas transit across Moldovan territory, New Europe reported recently. 
After the ceremony Kasyanov told the press that the agreement also provides for restructuring Moldova's debts for past Russian gas deliveries. He said the debt is too large and its size should be checked. Russia estimates it at about US$800m, he said. Kasyanov said that under the agreement the debt will be restructured. Until August 2003 Moldova will be paying only the interest of 5.75% per year, after which it will pay the debt during a period of 11 years in equal instalments. Kasyanov said the agreement also names the terms of payment for future gas deliveries.

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EBRD will do more private-sector deals in Moldova

The European Bank for Reconstruction and Development will increasingly support agribusiness, small businesses and privatisation process under its revised strategy for Moldova. The strategy, published for the first time on the Bank's website ( on 14th December, reflects the country's sovereign borrowing constraints and puts greater emphasis on private-sector development. At the same time in line with this new strategy, the EBRD is signing an agreement in Chisinau to open a US$4m credit line with Victoriabank, the country's first private commercial bank, which will help meet Moldovan businesses' increasing demand for medium-to long-term financing.
The strategy notes that Moldova has posted two years of steady growth while its political situation has stabilised. Further, the successful privatisation of power distribution companies to a foreign strategic investor is an important step that should act as a catalyst for additional foreign investment in the country.
Hidegard Gacek, the EBRD's Director for Moldova, said the bank welcomes the pace of reforms in the country but that implementation now will be the crucial test as Moldova makes the gradual transition to a market economy.
Ms Gacek said the new credit line for Victoriabank will be an important part of that process. The line aims to expand the EBRD's support to SMEs by ensuring their continued access to medium-term loans and trade facilitation instruments. Victoriabank's growth to date has been strongly supported by its participation since 1995 in various EBRD facilities including the Trade Facilitation Programme, and by the EBRD's participation in its capital. The previous SME credit line thorough Victoriabank, which has 11 years experience in the market, provided 89 investment credits to Moldovan companies that may otherwise have been unable to obtain it.
This latest deal with Victoriabank will not only help local companies develop their business and create jobs, Ms Gacek added, but also strengthen Moldova's banking system by supporting a bank that is financially strong with sound corporate governance principles.
The EBRD has signed 23 investment projects worth a total of €230.6m in Moldova's agriculture, energy, municipal utilities and banking sectors.

EBRD and IFC to pump US$50m in Moldova

The European Bank for Reconstruction and Development and the International Finance Corporation (IFC), will each lend US$25m to three recently privatised Moldovan electricity companies - RE Chisinau, RED Centru and RED Sud - for development and modernisation.
The three companies are majority owned by Uniyn Fenosa (UF), one of Spain's largest utility companies, which acquired the companies in a February 2000 privatisation auction for US$25m. The EBRD/IFC financing will support Uniyn Fenosa's programme of improving existing assets to increase reliability and reduce technical losses, and upgrade networks, according to the EBRD office in Chisinau, reports Interfax News Agency.
Success with the Union Fenosa programme will attract new foreign investors to Moldova, the office said. The loans will also support the government's efforts to increase the efficiency of the energy sector in Moldova, ensuring constant energy supply to 720,000 consumers in the centre and south of the republic. UF undertook to invest US$60m in the companies' development over five years. In July 2001, the EBRD acquired 18.6 per cent stakes in the three companies from UF for US$4.7m each.

Moldova won't give shares to Russia to pay gas debt

Moldovan President, Vladimir Voronin, denied reports that his country would be repaying its debts for Russian gas with shares in wine-making and tobacco factories, New Europe reported recently. 
ITAR-TASS quoted Voronin as saying he had read in the press that Moldova supplied to Russia a list of enterprises whose shares could be turned over to Russia towards repaying the debt. "This is journalists' invention. There is no such list," Voronin said. "We are concerned that these enterprises should function and that the profits they make enable Moldova to repay debts for Russian gas," he added. Shortly before Voronin's' recent visit to Moscow, Kishinev newspapers ran a list of Moldovan wine-making and tobacco factories whose shares would be turned over to Russia towards repaying Moldova's debt for gas of US$70m. 
Altogether Moldova jointly with the Dnestr region owes about US$900m to Russian gas monopoly Gazprom. It was reported that the arrangement about such a plan of repaying the debt had been reached when Russian Prime Minister, Mikhail Kasyanov, was on a visit in Moldova in early October.

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Moldova records notable rise in industrial output

Moldovan industrial enterprises registered a 14 per cent growth in the 11 months of 2001, compared to the same period of 2000, the Statistics and Sociology Department said, Basapress News Agency has reported. 
In November, the growth was 26.2 per cent, statistics show. Industrial output totalled 9,159m lei (US$704m) in January through November. The food industry registered a 21 per cent growth in current prices and a 15 per cent growth in average prices last year. Sixty-seven per cent (6,175m lei) of the overall industrial output rested with the food processing industry. 

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