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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: 266 - (27/02/03)

The Moldovan republic is experiencing political turmoil in the shape of opposition rallies. The Christian Democratic People's Party has been mobilising protests against the communist government's current policies. The demonstrators are shouting slogans such as "We want to be in Europe," "We are Europeans," "We want Shengen visas."
The last demand is the revealing one. Many Moldovans just want to leave what is after all the poorest country in Europe and try their luck elsewhere. This is not confined to the marchers who have numbered 2,000 or so each Sunday in January and February.
The government is not averse to joining the EU and NATO; far from it. But tough negotiations lie ahead. The marchers have not grasped that it is the situation of being bottom of the class that keeps Moldova out of Europe, not the government.

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.
The economy is at last showing some signs of growing, after contracting to a third of its size since independence in 2001. The Communists here have one huge advantage. At this stage at least, as they have been out of office, they tend to be freer of corruption, the besetting vice of all preceding governments and their cronies in the private sector, 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. But these are still exiguous sums.

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. The population is only four million, anyway. 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 some investors coming in. 
The Moldavian President has appealed to the European community to support Moldova in its integration into the European Union. 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, President Vladimir 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."

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ENERGY

Oil deposits reach 3m tonnes


According to estimates from the US company Redeco, which has an exclusive right to explore oil and gas fields in Moldova until 2015, the former Soviet Republic's oil deposits amount to some two-three million tonnes, Igor Oleynov, the head of the Redeco-Moldova company, told RosBusinessConsulting, stressing that these reserves were worth US$300m

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FOREIGN INVESTMENT

Russian investment in Moldova reaches US$150m in 2001-2002

Russian capital investment into the Moldovan economy has reached about US$150m in the past two years, the Russian embassy's economic adviser, Mikhail Ledenev, said in an interview on 31st January, Basapess News Agency has reported.
Russian investment activity has increased, which has become very noticeable lately. Apart from the energy sector, Russian capital is going into agriculture, the processing industry, wineries and the sugar industry.

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FOREIGN LOANS

Japan to furnish US$979,500 grant

The agreement on extension of the Japan Social Development Fund (JSDF) grant of US$979,500 to Moldova for Pilot Community Driven Development Project was signed on January 31st by Moldavian Prime Minister, Vasile Tarlev, and World Bank Country Manager, Carlos Elbirt, New Europe reported. The grant management has been entrusted to the Fund of Social Investments of Moldova (FSIM). 
The project consists of two main components. The first is Community Driven Development Small Grants. This component will provide small grants (up to US$75,000) to the established community-based organisations for implementation of micro-projects in the fields of education (schools, kindergartens, early child development programs), water supply, health education, village access roads and bridges, etc. 
The second is New Community-Based Social Care Services. This component will provide small grant funding (up to US$75,000) to the local NGOs for implementation of new types of non-residential social care services for the vulnerable groups, including women at risk, abused women, victims of human trafficking, youth at risk, and the elderly whose needs are not addressed by the state and for whom there are no services provided in their communities. It will also provide funding for consultant services to carry out participatory monitoring and evaluation in participating communities. The project will cover around 15,000 people in 14 selected communities throughout the Republic of Moldova. 
Apart from this grant, Japan has provided so far grant aid to Moldova both on bilateral and multilateral bases, amounting to more than US$29m.

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PRIVATISATION

Privatisation yields US$11.3m in revenue

The privatisation of state property brought 159.06m lei of revenues to the state budget last year. Of this sum, 109.8m lei was received through investment competitions, 12.8m through the Moldova Stock Exchange, 1.3m lei at auctions, 9.4m lei by the lease of production and office premises, 3.2m lei from housing stock privatisation, 22.4m lei from privatisation of land plots occupied by privatised objects. 
According to the privatisation department's data the biggest objects sold in 2002 were: Topaz electronic plant (Chisinau), whose 92.4% shares were sold to Salut scientific-production corporation of Moscow for US$950,000. The Russian investor undertook to invest US$4m in the production development during the next two years. 89.06% of Moldcarton cardboard plant (near Chisinau) was purchased by GasITERA Suisse AG (Switzerland) for US$2.15m, and is to invest US$11m in the enterprise within 5 years. In 2002, the company already invested US$3.3m in the production development. Vismos sparkling winery (Chisinau), had 99.96% sold to the Aroma trade house of Moscow for US$1.4m. According to the contract signed, Aroma is supposed to invest US$3.2m in the enterprise. The plant making enterprise (Calaras town), had 99.96% bought by the inter-Regional Wine Company of Moscow for US$3.7m. Investment is to be US$5m, and 600 hectares of vineyards are to be planted. 
All in all, the privatisation Department realised various-sized State parcels of shares of 41 objects.

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