Leu (plural: Lei)
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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 No: 265 - (28/01/03)
Russia is committed to keeping its 2,500 soldiers in TransDnestr, even after full withdrawal of the weapons and military hardware there. The enclave will remain under Russian protection, arms removed can be swiftly returned after all. Moldova cannot expect to see Trans-Dnestr become a functioning part of the country again, especially economically, any time soon.
The one Communist government in Europe
In many former communist countries, ex-communists do well in their new polities. In Moldova they are not even 'ex.' The communist Party of Moldova won elections to parliament (and consequently the presidency) in March 2001. President Vladimir Voronin has even increased his popularity since then.
This is perhaps not so extraordinary, given the economy is at last showing some sign of growing, after contracting to a third of its size since independence in 2001, leaving it the poorest in Europe.
The Communists here have one huge advantage. At this stage at least they tend to be freer of corruption, the besetting vice of all preceding governments and their cronies in the private sectors, which has grown apace since independence.
Upbeat economy minister
The minister for the economy, Stefan Odagiu, is promising growth of GDP of 6-7% in 2003 and subsequent years, a goal which would require an annual rise in domestic investment of 15-17%. Indeed he stresses the need for much of this to come from foreign direct investment (FDI), some US$80-90m per annum.
The volume of FDI into Moldova was US$65m in the first eleven months of 2002, compared with US$76m in the same period of 2001. Domestic investment amounted to US$71.4m in the same period, a 34.7% rise on 2001. The future depends on the investors into it, domestic and foreign.
A problematic nation looks west and east
Moldova is not unfortunately likely to attract FDI in the quantities it really requires. The TransDnestr problem is not going away. The extreme poverty and so very low wages mean an absence of a domestic market. Outside the EU and marginal to the Russians and Ukrainians, their obvious partners in transition, Moldova is not an evident place for export-based development.
This makes it clear why President Voronin is making a pitch for a new deal with the EU. If only some sort of rapprochement can be agreed, then Moldova can have a future again, with investors coming in.
The Moldavian President has appealed to the European community to support Moldova in its integration into the European Union. The appeal was circulated by the presidential press service on December 17th. In a letter to the EU Chairman-in-Office and Danish Prime Minister, Anders Fogh Rasmussen, European Commission President Romano Prodi, EU high representative for Common Foreign and Security Policy Javier Solana, and the heads of EU member-states, Voronin noted: "European integration is among the priorities of Moldova's internal and foreign policy," adding "To attain this high goal, the country has created a National Committee on European Integration, which has been instructed to work out a related concept and present it to the parliament." The main obstacle in Moldova's way to the EU is TransDnestr separatism, which "decreased the efficiency of reforms pursued and established the socio-economic situation in the country," the Moldavian President added. He suggested holding political consultations between Moldova and the EU, saying that negotiations on the settlement of the TransDnestr conflict, which were resumed on the basis of OSCE proposals, have come to a deadlock.
A Moldavian delegation's visit to the United States should contribute to the settlement of the TransDnestrian conflict and advance democratic and market reforms aimed at pulling the country out of its economic crisis, President Voronin said. "Our contacts with the United States are gaining momentum. The opposition's predictions that the communists coming to power will place Moldova in isolation have not become a reality. On the contrary, we are working together vigorously with other leading countries. The visit to the United States is an excellent example of such ties," Voronin noted.
He said that Moldovan-US trade turnover has gone up by 73 per cent over the past nine months. The president said that the TransDnestrian conflict is a source of instability and tensions in the region. Voronin expressed confidence that his visit to the United States would not hurt his country's relations with Russia. "It is necessary to make it clear once and for all that our friendship with Russia is not aimed against any one else's interests, rather, it helps us meet our common interests more effectively," he stressed. The president noted: "The partnership of two superpowers like Russia and the United States is a case for optimism and opens up new opportunities for the whole world and our small country as well. These open relations between the East and West provide much better guarantees of our security and sovereignty than any of the Russophobic or anti-American statements made by many of our politicians."
Moldova signs gas contracts
In 2003 Moldova will purchase 1.1bn cubic metres of gas from the Russian company Gazexport at US$61.5 for every 1,000 cubic metres, RosBusinessConsulting quoted Gennady Abashkin, the head of the Russian-Moldavian company Moldovagaz, as saying. He said that an agreement between Moldova and Gazexport had been signed in Moscow. Moreover, Moldovagaz has made a contract on gas supplies with Gazprom. The Russian gas monopoly is to supply 1.6bn cubic metres of gas in 2003. The price for gas is US$80 for every 1,000 cubic
Government offers FEZ guarantees
The Moldavian government has confirmed the state-given guarantees stipulated in the current legislation on free enterprise zones (FEZ), New Europe reports. The guarantees for tax and customs privileges will remain for FEZ residents for 10 years as from the enactment of laws on stopping the activities of free enterprise zones or their sub-zones. The government has adopted regulations on the procedure of work cessation of the FEZ Expo-Business-Chisinau's sub-zone and on ensuring state guarantees to its resident companies. The document stipulates the duties and authority of the FEZ administration and residents for a period till August 6th, 2012 - the time of the early cessation of the sub-zone's activities.
Within two months as from publication of the Regulations, the FEZ administration must introduce amendments, related to the sub-zone work cessation, to the contracts signed earlier with the residents.
Moldova's trade with CIS in the red in 2002
In the first 10 months of 2002 Moldova ran up a negative balance of US$23m in trade with CIS countries as a result of significant growth in imports in comparison with slow growth in exports, data from the CIS Statistics Committee shows, Basapress News Agency has reported.
Though imports from CIS countries rose by 20 per cent, exports rose by just 3 per cent. One reason for the small rise in exports is the exclusion of some Moldovan products from the free trade system.
The trend in the 2002 trade balance comes in contrast to the one in 2001, when exports rose faster than imports. In January-October 2001 Moldova had a positive trade balance of US$19.1m with CIS member states.
Investments in Moldova drop
The volume of direct foreign investments in the Moldavian economy was about US$65m over the first 11 months of 2002, sagging by US$76m as compared to 2001, RBC quoted Moldavian Economy Minister, Stefan Odagiu, as saying. In 2001 direct foreign investments in Moldova were US$141m, he said.
At the same time, he pointed out that with US$71.4m in domestic investments over the reported period, the total amount of investments advanced 34.7 per cent as compared to the corresponding period of 2001. These resources were mainly invested in light industry and agriculture. Odagiu stressed that to reach the planned six to seven per cent growth of the GDP, it was necessary for Moldova to attract about US$80m to US$90m in direct foreign investments per year and an annual increase in domestic investments per year by 15 to 17 per cent.
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