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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: 276 - (01/01/04)

The Moldovans are doing better than in the 1990s economically, but not geopolitically.

Economy recovers
To take the good news first, the economy is booming albeit from the base of being the poorest country in Europe. It is doing so on the back of a huge export boom, which saw exports rise by 24.9% in the first eight months of 2003, if official figures are to be believed.
GDP on the same reckoning went up by 6.8% last year. Industrial growth was evidently 19.3% on the same sources.
But this is in a country whose economy contracted to one third of its 1991 level in the 1990s. There is a lot of scope for further improvement there. 
One key factor is the transfers from abroad of $149 million, some 20% of GDP. These funds are from Moldovans seeking a better life in the West. They are likely to encourage the exodus to continue.

The IMF gives guarded approval
The IMF is the key player in giving international support. "The IMF is awaiting a governmental development strategy for the country to pave the way for the beginning of new lending talks," David Owen said. According to Owen, the IMF is ready to send a mission for talks when the government signals the strategy is ready and has support from society. 
Highlighting his report on Moldova, during his recent visit to the country, Owen noted that the country has enjoyed economic growth over the past three years, and has attracted more foreign investments into its economy. "However, the Moldovian government will have its job to cut out to maintain economic growth rates in the coming tow years," he said. In a more general approach, the IMF official viewed that the government needs to be less involved in price formation and business activity, remove all import restrictions and pay more attention to fighting corruption, he added. 

Back to the Soviet Union ?
In other respects things are not going too well. The Moldovans are finding themselves being irresistibly drawn back into the Russian fold. There is little they or the West can do about it.
This may well be Moldova's destiny now, if plans hatched in the autumn unfold. The Kremlin has forced on the Moldovans a new interpretation of their relationship with Russia. Far from removing troops from TransDnestr, as it has pledged to do under the supervision of the Organisation on Security and Cooperation In Europe (OSCE), it is reinforcing them. The base is being strengthened, which can have no conceivable military objective, but does have a geopolitical one all right. Big Brother is coming back.
The Moldovans voted for the communists in March two years ago, giving them an endorsement of over 50% in parliamentary elections. The parliament then elected their leader, Vladimir Voronin, as president.
It is hardly surprising if the communists, and they are exactly that, not former communists as in Romania next door, should be favouring a reunion of sorts with Russia. Moldova has historic ties with Russia, as it does with Romania. There are Russians aplenty, as well as Ukrainians, in the TransDnestr republic, which is formally part of Moldova. In fact secessionists there, under the thuggish leadership of their president, Igor Smirnoff, have been living in a sort of Soviet time warp for over a decade.

The EU beckons ?
The Moldovans have no rosy ideas of the West by now. They know that unwary Moldovan girls risk being taken into prostitution rackets in Western capitals, while there is a big market for body parts there, supplied by desperate Moldovans.
The proposal to join the EU, nevertheless, appeals. Romania is due to join in 2007 and emulating their Romanian cousins is a more welcome idea to many than being engulfed by Russia.
Moldova will not go back on its quest to integrate with the European Union, President Vladimir Voronin, said at a session of the Council of Europe's Committee of Ministers. "Integration with the European Union remains a top priority for the country," he said. According to Voronin, Moldova's chairmanship in the Committee of Ministers of the Council of Europe has significantly improved the country's image. "Truly democratic reforms have gained speed and numerous international standards have been introduced over the past six months," he said. "Experience in constructive cooperation with the Council of Europe will be very helpful in reaching our future goals, above all, joining the European Union," Voronin said. "We know that the road to the EU is hard, but our resolve to integrate with this organisation will not waver," Voronin underlined, noting that the country's desire to join the EU will have a favourable impact on tackling the Transdnestrian issue.
But the EU is hardly likely to extend its frontiers to include such a troublesome country, the poorest now in Europe after Albania.

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ENERGY

REDNord/RED Nord-Vest bear major investment interest


"The RED Nord and RED Nord-Vest electricity distribution enterprises have become more attractive to investors thanks to the improvement of their technical and financial shape," the European Privatisation and Investment Corporation/Raiffeisen Investment AG (EPIC/RIAG) announced recently.
The group was selected last June as consultant to the Moldovan government regarding the privatisation of the two state enterprises, Infotag News Agency recalled in a recent report.
Prime Minister Vasily Tarlev recently conducted a meeting of the competition commission set up for the objects privatisation. According to the EPIC/RIAG report, the improved situation at the enterprises permits the hope that they may be sold for quite a high price. The consultant company also analysed the situation at the European energy market and indicated international companies that may be interested in taking part in the forthcoming privatisation contest. In the meantime, the commission will systematise the information and take a decision concerning the enterprises destiny. For the first time, all the five REDS in Moldova were put up for an investment contest in 1999, and Union Fenosa of Spain was prepared to buy all of them. However, the then legislation did not permit the sale of all REDs in the country to one owner, consequently Union Fenosa bought only RED Centru, RED Sud and RED Chisinau. After this, the two northern REDs were put up for auction twice but failed to be sold.

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FOREIGN ECONOMIC RELATIONS

Moldova, Italy sign labour migration agreement

Moldova and Italy have agreed to step up mutually beneficial cooperation in all fields. Five cooperation agreements, which were signed during President Vladimir Voronin's visit to Italy, are aimed at achieving this. The new documents complemented the legal basis for cooperation, which had consisted of 15 documents, Infotag News Agency has reported.
Italy and Moldova agreed to step up their cooperation, which has already borne fruit. Over nine months of this year, Italy was Moldova's third most important partner in the EU. Over the period, bilateral trade amounted to US$134m, including Moldovan exports to Italy worth US$78m.
The agreement on the quota of labour migration of Moldovans to Italy was one of the documents signed during the Moldovan delegation's visit to Rome. 
The need to open an Italian diplomatic mission in Chisinau was discussed during the visit. Italian Prime Minister Silvio Berlusconi promised to come to Chisinau quite soon, after a decision on opening the mission has been adopted.
It was also pointed out that Moldova should open its consulate in Milan, as the majority of Moldovan citizens who come to work in Italy settle in that area. It is difficult for the Moldovan embassy in Rome to solve their problems.

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FOREIGN LOANS & AID

World Banks grants US$35m to improve Moldova's utilities

The World Bank has approved a US$35m credit to implement the Energy II Project in Moldova, Moldovan news agency, Infotag, reported on 26th November. The project's objective is to improve heating in schools and hospitals, and ensure a more reliable electricity supply across the state.

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