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MOLDOVA

 

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REPUBLICAN REFERENCE

Area (sq.km) 
33,843 

Population 
4,439,502

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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Update No: 286 - (28/10/04)

Moldova wants US, EU to help solve TransDniestr headache
TransDniestr - populated mainly by Russian speakers - unilaterally declared independence from the rest of Moldova, which is mainly Romanian-speaking, in 1990. Russian forces were forced to intervene in the region in 1992 after fighting between the opposing sides left hundreds dead. 
Moldova said on September 30th that it was fed up with trying to end its long-running territorial squabble with TransDniestr by dealing directly with the separatist region and instead wanted the United States and the European Union to step in. 
Moldovan President Vladimir Voronin said that henceforth there would be no more negotiations with the separatist authorities because talks between the two have got nowhere. "Negotiations have been unsatisfactory and counterproductive, because while Moldova applies the terms of the agreements signed, TransDniestr ignores them in 99 percent of cases," he said. 
"Negotiations between the five (Moldova, TransDniestr, Russia, Ukraine and the pan-European Organization for Security and Cooperation in Europe) have been going on for 12 years now, but nothing has come out of them," said Voronin, adding that he wanted greater involvement by the EU and the United States to find a solution. 

Smirnov reacts
But the US and the EU are unlikely to make any progress with the embattled and retrograde leadership in TransDniestr. "Unification with Moldova is out of the question after Chisinau has refused to form a federation with the Dniestr region," Dniestr regional leader Igor Smirnov said at an international scientific conference in Tiraspol. The conference was dedicated to the 80th anniversary of the Moldovan Autonomous Soviet Socialist Republic. 
He said Moldovan President Vladimir Voronin had refused from his own federalization idea "under the pressure of the United States, the European Union and the Organization for Security and Cooperation in Europe (OSCE)." 
Smirnov called for holding a referendum, in which residents of the Dniestr region will decide on their future. "International observers must watch the plebiscite, so that its results become a law for us and the international community, primarily in the person of the United States, the European Union and the OSCE," Smirnov said.
Meanwhile, Voronin has again criticized the Moldovan opposition and called it "the fifth column of the Dniestr region." "There are forces inside and outside Moldova, which do not want the existence of the independent Moldovan state," he said at another conference marking the 80th anniversary of the Moldovan Autonomous Soviet Socialist Republic. 
The Moldovan Autonomous Soviet Socialist Republic was established within Ukraine in 1924 and existed till the establishment of the Moldovan Soviet Socialist Republic on August 2, 1940. After the disintegration of the former Soviet Union, nationalist parties, which took the office in Chisinau, proclaimed the policy of unification with Romania. In response Tiraspol established its own state, which triggered an armed conflict.
The dispute was given a personal edge recently over a football match held in the separatist region. Naturally, President Voronin supports the Moldovan national team and is present at most games, but on his way to the Euro 2004 qualifier in April 2003 against Holland - the last home defeat - Voronin was stopped by Smirnov's separatist border police as he tried to enter Transnistria. The order from Tiraspol: the president of Moldova was no longer allowed to travel in the region. 
Voronin was furious, but powerless. "I don't like this at all," he declared. "Football should not be about politics, and that is why I support Zimbru. The worst thing is that the problem is about so much more than football. I was born in Transnistria, and my mother still lives there: three years ago she suffered a stroke, and I still haven't been allowed to visit her." 

Poverty the real problem
Moldova is one of Europe's poorest states, its economy having plunged to one third of its size at independence. This is despite its rich farmland and renowned vineyards that during communism which earned it the status of the vineyard of the former Soviet Union. Lack of reforms, political turmoil, and dependence on Russian energy imports have brought Moldova's once prosperous agriculture-based economy to its knees and forced its mostly rural population into deep poverty and mass migration.
Many of Moldova's villages are half-deserted, most of its young people having gone abroad to find work so they can send money to feed their families back home. According to various estimates, between 350,000 and 1 million of Moldova's more than 4 million people are living abroad, many illegally. 
Not everybody has left the countryside, though. According to official data, there are more than 500,000 small farm households in Moldova, although many times they are being looked after by the elderly. 
During Soviet times and before World War II, when it was part of Romania, Moldova was famous for fertile land that supported wheat fields, fruit trees, and huge vineyards that produced wines renowned throughout the former Soviet bloc. 
But after it gained independence in 1991, Moldova's economy collapsed in the absence of the centralized Soviet era market.
Farmers who are trying to stand on their own feet face numerous obstacles. Gheorghe Pamfil has some 4.5 hectares in Rusestii Noi, 25 kilometres southwest of Chisinau. He grows peaches, apricots, and grapes, which he sells at the marketplace in the city. But Pamfil complains that his land is divided into several patches far from each other. He says the government is interested in maintaining the Soviet-era collective farms under a different name. 
"We grew up with [Soviet collective farms] kolhoz and sovhoz, and it's very difficult [for the government] to part with those huge kolhoz-type associations, where people used to work for nothing," he says. "I think that the government is not keen to help the farmers. They don't even pay attention to us. They repeatedly refused to come to our farmers' association meetings, although we invited them. They want to export grapes and wine only from huge farms, which are basically the same kolhoz. They only changed the names on the door." 

Triple dependence on Russia
Moldova's economy remains heavily dependent on energy imports from Russia. Its main export product, wine, is seen as an important means to reduce its energy debts to Russia. 
But Moldovan economic analyst Mihai Patras says most of the $600 million gas debt is owed by Moldova's breakaway region of TransDniestr, which is causing huge losses to Moldova's economy. Patras told RFE/RL that interest groups from Russia have started taking over Moldova's wine industry to make up for Moldova's gas debt. 
"We have ended up in triple [Russian economic] embrace -- through fuel imports, through [the TrasnDniestr separatist regime's actions in] Tiraspol, and through the [Russian] control over important [wine-producing] factories. I believe that these processes must be stopped [if Moldova wants to recover economically]," Patras says. 
"How can a country develop in an adequate, viable manner without a unified customs service?"
Moldovan Prime Minister Vasile Tarlev, meanwhile, told RFE/RL that much of Moldova's economic doldrums can be blamed on its inability to control its border -- hence, customs -- with separatist TransDniestr. TransDniestr is seen as a major international contraband and trafficking hub. 
Tarlev says Moldova's economic growth would increase tenfold if customs in TransDniestr could be brought under Moldovan control. "Speaking of the difficulties we have to confront, they are also a major consequence of the lack of a single customs space," he says. "How can a country develop in an adequate, viable manner without a unified customs service? This is a painful problem. If it hadn't been for this problem with TransDniestr, we would have had at least 10 times better economic results. This is painful for me personally and for Moldova's people as a whole." 

The unlikely saviours - the communists
Tarlev says the Communist government, which took power in 2001 by promising to restore living standards to Soviet-era levels, has managed to turn the economy around after three years in power. He says taxation was reduced from 28 percent in 2001 to 20 percent this year, and is set to decrease to 18 percent next year. He says the underground economy was already reduced from up to 65 percent in 2001 to some 30 percent this year. 
Furthermore, Tarlev says a strategy to fight poverty has been finalized. "First of all, it is a strategy which determines clearly the priorities for Moldova," he says. "It was a wide-ranging process, which involved the local administration, civil society, NGOs and international organizations. In other words, the whole society took part in the making of this strategy. We have recently finalized it, and it has been approved by the government." 
In Moldova's villages, however, antipoverty strategies are a distant notion, and people confront the stark reality of not being able to feed their children. 
In Braviceni, some 50 kilometres northwest of Chisinau, 57-year-old Natalia Cociorva faces despair. Her sons and their wives have gone to Moscow to work, and she has not heard from them for months. She had to sell things from her home to get money to buy medicine for a small granddaughter she is taking care of. She says the government only pretends that things are getting better. 
"They [the officials] should go visit the villages unexpectedly, and not with two weeks notice that [President Vladimir] Voronin is going to visit some village. Of course, then they clean up everything and welcome Voronin with a rich dinner, and then [officials] say, 'Look! People live well.' No, people live very hard lives. It's as bad as it was after the [World] War [II]," she says. 
Not everybody is displeased with the job the government is doing. Many old pensioners in rural areas praise one achievement of the Communists over the past four years -- paying pensions and salaries on time. 
Seventy-seven-year-old Gheorghe Dohocheru lives in Pelivan. "They [the ruling Party of Moldovan Communists] have done a lot of good," he says. "We get the pension every month, on the same day. I get my pension on the eighth of every month. They increased our pension, too, in the last four years [since the Communists came to power]. I used to get 160 leis [$13] per month. But now I get 400 leis [$34]." 
For Moldova, hope may come from the young people who went abroad but chose to come back. Anatolie Rusu -- from Vasieni, 18 kilometres south of Chisinau -- has a degree in agriculture and went for postgraduate studies in the United States and the Netherlands. Unlike many others, Anatolie decided to return to his village. 
Rusu started a small sheep farm this year. He has 115 sheep and an old Soviet tractor, but his farm has no electricity. He hopes to get a small loan from the World Bank in Moldova to bring electricity to his farm. He told RFE/RL that getting more young people to invest in farming could change Moldova's fortunes. 
"Private property is sacred. We have to understand that from the very beginning. Everything starts from this, and I reckon this should be the basis for development," he says. "Where there's private property, there are hard-working people who implement new technologies, new ideas. That's what I saw abroad. What you learn, you need to implement in practice. Very important would be to get more young people to open businesses in agriculture."

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ENERGY

Moldova owes Gazprom US$648.5m - Moldovgaz

Moldova's Moldovgaz gas utility owed Russia's Gazprom US$648.5m at the start of September, Gennady Abashkin, the utility's chief executive, said, reported Interfax News Agency. 
Moldova itself owes US$120m and Transdniestria owes US$528.5m.
Moldovgaz aims to restructure the US$120m debts to Gazprom for gas supplied in 2002-2003. Gazprom Deputy CEO Alexander Ryazanov said "the US$120 represented debt minus fines and other indebtedness that has accumulated since 1994."
Abashkin said the company's supervisory board discussed settlement of Transdniestria's debt recently. "The situation on the Dniester's Left Bank is such that if all consumers paid all their bills, there would still not be enough money to settle with the supplier Gazprom." He said Transdiestria had to resolve the tricky problem of raising gas tariffs, which the Right Bank, in other words Moldova, had already achieved successfully two or three years ago.
Moldova has been paying off all its gas bills this year, but Transdiestria has only been paying just over 45%, Abashkin said. Gazprom is ready to write off part of Moldova's gas debt, deputy chairman of the board of the Moldovagaz Russian-Moldovan joint venture Mikhail Gorechenkov, said recently according Itar-TASS.
He explained the decision by the fact that the republic, excluding the Dniester region, began for the first time in 2004 to make 100% payments for current gas supplies. After signing the agreement, Gazprom will stop the imposition of fines for overdue payments on historic debts, Gorechenkov said, according to Prime-TASS.
As of today, the penalty's total has reached US$176m. Ryazanov said his company was ready to reschedule the Dniester region's total gas debt amounting to some US$1bn, on the condition that it begins 100% payments for current supplies. At present, the Dniester region only pays 50% of the gas price. Moldova-gaz's press service said a decision had been made to hire a foreign firm to audit the province's debt for the gas consumed in 1995-1997.
During that period, the Dniester region received US$324m of gas, but paid just US$12m. Gazprom owns 50% plus one share in Moldovgaz, which buys Russian gas and transports it to and sells in Moldova. Moldova owns 35.3% and Transdniestria 13.5% of Moldovgaz.

Itera launches construction of Moldovan power facility

The Itera international group of companies has started to build a gas-steam power plant in Moldova with a capacity of 450 megawatts, a source in Itera-Moldova said, Interfax News Agency reported.
The source said that investment in construction would amount to US$325m. Itera has agreed with a consortium of foreign banks to receive funds for construction. The volume of funds to be borrowed has yet to be disclosed. The power plant will have three turbines - two gas and one steam - each with a capacity of 150 megawatts.
The expected construction period amounts to about three years. The source said that some of the electricity will be sold in Moldova, but most will be exported. He said that the project is being implemented as part of a concept to develop power-generating capacity, passed by the republic's government. Moldova currently only produces 30 per cent of its electricity. However, the source said that a number of unresolved issues remain, connected with taxation, particularly with the importation of equipment.
The Moldovan Energy Minister, Yakob Timchuk, told Interfax that construction of a gas-steam power plant, which will cost an approximate US$234m, would begin in the village of Burlecne in Moldova. He said that the plant, which has a capacity of 450 megawatts, is being built by Itera-Moldova Energy and should be launched in 2007. The plant is being built in line with an energy security strategy, confirmed by the government in 2003.
This strategy also calls for the construction of a similar plant in Beltsy. The contractor for the construction of this plant will be appointed by the end of 2004. The total current capacity of power plants in Moldova amounts to 300 megawatts, not including Transdniestria.

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