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moldova

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MOLDOVA


 

 
Key Economic Data 
 
  2002 2001 2000 Ranking(2002)
GDP
Millions of US $ 1,621 1,500 1,300 144
         
GNI per capita
 US $ 460 400 400 162
Ranking is given out of 208 nations - (data from the World Bank)

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

  

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: 272 - (29/08/03)

The Moldovan 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.

Communist comeback
The one thing that Moldova has achieved is the creation of a sort of democracy. This was demonstrated in March 2001 when the communists got back in on 50.1% of the vote, who then elected their leader Vladimir Voronin as president. Curiously, the US and the EU welcomed this development. Not without reason. At least there was a chance that a new regime might not be as corrupt!
Voronin has, indeed, done well, albeit Moldova remains a very poor country. As a son of Trans-Dnestr himself, with a Russian origin, he 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 2001.
What Voronin has done instead is to make conciliatory gestures towards the Russians, re-introducing Russian into the school curriculum as a compulsory subject (so is the native Romanian, the language of 20% of Moldovan citizens). There have been protests in Chisinau against this move by supporters of right - centrist parties attached to the Romanian heritage of Moldova. But at least they were allowed to take place. That Moldovans should know some Russian is not an outlandish idea, given history and the presence of so many Russians in their midst.
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

Russia agrees size of Moldova's debt to Gazprom

The debt of the national gas supplier [joint Moldovan-Russian venture] Moldovagas to Russian gas giant, Gazprom, amounts to US$112m, excluding penalties worth about US$170m for missed payments, Deputy Energy Minister, Felix Varlan, told Basapress News Agency. Varlan had been on a three-day visit to Moscow to tally the gas debt.
Varlan said the amount of the unpaid debt is for gas supplied in 1993-94 and does not include the Dniester region. A joint Moldovan-Russian expert group is to present the two countries' governments with a programme and options for paying the arrears and penalties by 1st October 2003, so the debt does not affect gas supply in the upcoming heating season.

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FINANCIAL NEWS

Trans-Dniestr imposes 100 per cent tax on Moldovan imports

The unrecognised Republic of Trans-Dniestr imposed a 100 per cent tax on all goods imports from neighbouring Moldova, according to a July 17th Infotag News Agency report. The Russian-speaking province, Trans-Dniestr, seceded from Romanian-speaking Moldova after a short war in 1992.
The previous import tax for Moldovan goods sold to Trans-Dniestr consignees was 20 per cent. The five-fold increase came, the government order said, in retaliation to Moldova's success earlier in July in convincing Ukraine to refuse most Trans-Dniestrian goods, on the grounds that the authoritarian pseudo-state was not an independent country capable of sending exports abroad.
The Ukrainian decision, the result of more than a half-decade of Moldovan diplomacy, badly damaged Trans-Dniestr smuggling-based economy, which had depended on importing European and Asian goods illicitly, and then re-exporting them as legitimate Moldovan products.
The Trans-Dniestrian government order claimed the import tax increase was necessary "in order to protect Trans-Dniestrian manufacturers." Moldovan efforts to remove Trans-Dniestrian products from the world market "are nothing less than an economic blockade" it said. Trans-Dniestr's economy will lose US$224m annually, as a result of Moldova's "hostile" initiative, the statement said. The import tax affects close to a billion dollars of Moldovan trade with Ukraine and Russia.
Vasyl Shova, Moldova's minister of reintegration, accused Trans-Dniestr's government of imposing the tax hike in an attempt to sabotage ongoing talks between Chisinau and Tiraspol on Trans-Dniestr's reunification with Moldova. Moldova and Trans-Dniestr earlier this year began discussions on Trans-Dniestr's return to Moldovan control under a federal structure, a condition long held by Trans-Dniestr as non-negotiable. Negotiations have, however, produced few results, as the sides are still divide on the structure's details.

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FOREIGN ECONOMIC RELATIONS

Romanian government allocates 120bn lei to cooperation with Moldova

Romania's government allocated for this year almost 120bn lei (1 euro = 37,400 lei) for its cooperation relations with the Republic of Moldova, Rompres News Agency has reported. 
Published in the Official Gazette on 6th August, a resolution of the Bucharest government provides for the allocation, from the fund at the disposal of the government, of 119.978bn lei, of which 30bn lei for financing the broadcasting of Programme 1 of the Romanian Television Company in the territory of the Republic of Moldova and 89.978bn lei for financing some projects of economic and cultural integration between Romania and the Republic of Moldova. 

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FOREIGN LOANS

IMF denies US$25m in credits to Moldova

The International Monetary Fund has denied Moldova US$25m in credits under a programme to combat poverty and stimulate economic growth, Interfax News Agency has quoted IMF envoy to Moldova, Edgardo Rujier, as telling a press conference in Chisinau.
He said the resumption of credits for Moldova would not be discussed by the IMF Board of Directors on September 10th. The main reason for making this decision is that Moldova has not fulfilled the agreed terms for resuming credits by July 21st he said. 
The resumption of the World Bank's SAC-III programme is also an undecided issue. The bank is also worried by the Moldavian government's failure to fulfil some of the agreed requirements. For instance the government reduced prices for energy and gas without reason, Jujiero said. He said that the next IMF mission would arrive in Chisinau no earlier than October. But the current programme will not be discussed. The mission will monitor Moldova's economic situation and start talks on a new programme, he said. The IMF's current programme finished in December 2003. He said Moldova would not have the right to apply to the Paris Club before the end of the year for restructuring its foreign debts. 

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