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MOLDOVA


 

 

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Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 1,964 1,621 1,500 141
         
GNI per capita
 US $ 590 460 400 157
Ranking is given out of 208 nations - (data from the World Bank)

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REPUBLICAN REFERENCE

Area (sq.km) 
33,843 

Population 
4,446,455

Principal 
ethnic groups 
Moldovans 64.5%
Ukrainians 13.8%
Russians 13.0%

Capital 
Kishinev 
(Chisinau)

Currency
Leu (plural: Lei)

President 
Vladimir Voronin

  

Update No: 291 - (30/03/05)

The Communists win again, both parliament and the presidency
Moldova is the poorest country in Europe. Nevertheless, the incumbent communist government, the only one in Europe, was re-elected in February in parliamentary elections, exactly four years after its initial victory in February 2001. It obtained 46% of the total vote, rather than the 50% of last time round. But that was a triumph in the circumstances, indicating a high degree of public support. The Communists have already come to terms with several lawmakers from each of the opposition parties and are finding no difficulty in forming a new government.
This is not so surprising since they have done a better job than their predecessors, who were notorious for corruption and self-seeking. In the bad old days of the Soviet Union so were the communists. But much less so now. The corrupt careerists left the party after 1991, leaving a residue of idealists behind. In the early 1990s nobody was expecting the Communist Party of Moldova ever to be in power again.
In fact they managed to improve the payment of public salaries and pensions and the general conduct of affairs in the last four years. Expectations were so low that any improvement was most welcome.
Moldova's president is elected by parliament so that the elections were really presidential as well as parliamentary, ensuring President Vladimir Voronin's re-election too. At a session on March 23rd, the Central Committee of Moldova's ruling Communist Party recommended Vladimir Voronin to the post of president of the republic. Voronin said that he was confident that the new parliament, elected on March 6th, would vote for the head of state, that is himself, at the first try. Voronin made the statement in comments on the talks which the authorities are conducting with the opposition. 
Communists hold 56 out of 101 mandates in the republic's parliament, which enables them to form the parliamentary leadership and the Cabinet. 
To elect the president, they need the support of 61 lawmakers. Hence, the Communist Party is in talks with the opposition -- the Democratic Moldova bloc that received 34 mandates at the election or the Christian-Democratic People's Party which has 11 mandates. 
It is true that both these Parties announced their intention to boycott the election of the Communist president. But, if the parliament fails to elect the head of state at a second try, it will be dissolved and a new election will be called. 
Voronin made it clear that his confidence stems from the difficult situation in which the 16-Party Democratic Moldova bloc found itself. Some analysts predict that the bloc will split into three to four factions in parliament. 

General approval by international monitors
The elections do not seem to have been rigged, unlike in Ukraine next door or distant Kyrgyzstan recently. European election monitors were visiting the former Soviet republic of Moldova in late January and early February. Josette Durrieu and Andre Kvakkestad, two members of the Monitoring Commission of the Parliamentary Assembly of the Council of Europe, arrived in the Moldovan capital, Chisinau, on January 31st for a three-day visit to monitor preparations for the elections.
PACE experts met with President Voronin, parliamentary speaker Yevgeny Ostapchuk, and faction leaders and commission chiefs. On Feb. 1, the PACE officials travelled to TransDniester to see if the talks on the TransDniestern settlement could be resumed and if local residents would have an opportunity to cast their votes in the parliamentary elections.

New deal for TransDniester?
People were stunned and pleased by the victory of Viktor Yushchenko in Ukraine, as, indeed, were many people throughout Europe. Voronin attended his inauguration on January 23rd. They agreed to meet shortly to discuss a settlement of the Dniester Region issue. Relations are pretty sure to improve. They could hardly have been worse beforehand.
For instance, Ukraine and Moldova are to resume talks on enhancing control at the border between the two countries. Moldovan President Vladimir Voronin maintains "This sector of the border, 460 km long, is open to smuggling and brings big dividends to certain forces". This was a broad hint that he meant the corrupt gang of unreformed communists, indeed Stalinists, in charge of the TransDniester region. In retaliation, Ukraine's ex-President Leonid Kuchma accused Chisinau of an intention "to organise an economic blockade of the Dniester Region," with whose grim president, Igor Smirnov, he had long been in cahoots.
Premier Vasile Tarlev expressed hope that Ukraine's new leadership would support the proposal made by Chisinau to make arrangements for joint customs control at the Ukrainian-Moldovan border. Last year, the Moldovan authorities applied to the European Union and the Organisation for Security and Cooperation in Europe in a request to carry out international monitoring of the border, particularly its Dniester Region sector. 
At the same time, Benita Ferrero-Waldner, European commissioner for international affairs, has stated that a number of delicate problems hinder a special and concentrated relationship between Ukraine and the European Union and that one of the problems concerns Moldova and the Dniester Region.

Russia to lose out again?
The role of the breakaway TransDniester is crucial in this context, not only for a settlement inside Moldova, but also for Russia's future authority in the former Soviet republics. TransDniester is not recognised by any country in the world but in fact exists because it suits Moscow that it should do so.
The balance of forces in the region shifted after the "orange revolution" in Ukraine. If the previous Ukrainian leadership supported Russia and, accordingly, tacitly sponsored Tiraspol, the capital of TransDniester (because Ukrainians, like Russians, form a significant part of TransDniester's population), the new Ukrainian government apparently supports Chisinau. 
Wedged between the two clearly unfriendly states, the breakaway republic's leaders are seeking a way out and are trying to build bridges with the new Ukrainian government and the West. Smirnov, the president of the unrecognised republic, even described a settlement with Chisinau as a top priority. 
Neither the West nor Ukraine seems willing to compromise, though. This probably means the former is hoping to re-enact the successful Georgian and Ukrainian scenarios to replace Smirnov with a more palatable figure. 
The Russian executive power has so far refrained from making any tough statements. However, if Moscow agreed to let TransDniester be resolved on Chisinau-friendly terms promoted by the West, it would mean that Russia is letting yet another CIS state slip out of its zone of influence. 
President Vladimir Voronin has announced that Moldova's European integration strategy may see it (probably including TransDniester) joining NATO, which is not an option for Moscow. If this becomes a reality, Russia will have to withdraw its military forces from TransDniester. Moscow is also worried that Chisinau, if it takes control of Tiraspol, will try to force Russian business out of the breakaway region. It should be noted that the unrecognised territory of TransDniester has an international reputation for arms dealing of the most disreputable kind - hence big money is at stake.

Economy on the mend
The government, as we have seen, went out of its way to make payment of salaries and pensions more prompt. This is the easier to do because the economy is picking up, albeit from a very low base. 
According to preliminary data, Moldova's GDP growth totalled 7.3 per cent in 2004, the republic's Department for Statistics and Sociology has reported. The Moldovan GDP amounted to US$2.6bn in current prices and US$2.4bn in comparable prices. As the country's economy ministry told RBC, GDP growth was linked primarily to a dynamic development of the service and production sectors. It is worth mentioning that initially, the ministry forecasted GDP growth at 5 per cent in 2004.
Government revenues are being doubled; hence also its spending plans. This made the election result a shoo-in.

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CREDIT RATINGS

Fitch: Moldova's economic situation remains difficult


Fitch Ratings, the international rating agency, affirmed recently the Republic of Moldova's long-term foreign currently rating at B- (B minus) outlook stable and the long-term local currency rating at B outlook stable, New Europe reported.
The Fitch's report read that the economic and political situation remains very difficult. The large improvements in the external and government debt ratios over the past five years reflect Moldova's near inability to access international borrowing, the impact of high domestic inflation and a strong exchange rate as well as real gross domestic product (GDP) growth. Debt ratios have also improved due to heavily discounted debt restructuring deals (most significantly the Gazprom deal of 2004).
Moldova remains in arrears on repayments of principal on most of its bilateral external debt although it continues to pay interest on these loans. Private sector debt has also risen sharply and now, excluding energy debts, exceeds that of the public sector. The same is true of private sector arrears which are estimated at just over US$100m compared to public sector arrears of about US$20m after the recent repayment to Gazprom. Until more normal relations with creditors can be restored, especially the Paris Club, the country is unlikely to graduate from the B- rating level and will remain subject to close monitoring.
The economy has grown at a broadly acceptable rate in the past four years (about 6 per cent) and will probably continue to do so.
This depends partly on continued export growth but especially remittance inflows from Moldovan émigrés working abroad, both in the CIS and the west, whose numbers have mushroomed in recent years, the report said.

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FOOD & DRINK

Moldova boost wine exports

Last year Moldova exported US$284m worth of alcohol products - 15% higher than in 2003, Infotag News Service reported.
The exports of bottled grape wines reached 207m litres (+20%), of sparkling wines 7.8m litres (+40%). Over 80% of all exports went to the Russian Federation, the news service said. The Moldova-Vin Agri-Industrial Department claims that the year 2004 was the sector's best one in all recent years. Moldovan wineries had bottled 211m litres of quality wines - 16% more than in the previous year.

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FOREIGN RELATIONS

Moldovan premier discusses ties with Serbian president in Macedonia

Moldovan Prime Minister, Vasile Tarlev, who was attending the Southeastern Europe summit in Skopje, Macedonia, has discussed opportunities for extending Moldovan-Serbian relations with Serbian President, Boris Tadic, Basapress News Agency reported.
Tarlev informed Tadic about Chisinau's decision to open a diplomatic mission in Belgrade in 2005 and send an ambassador there, the government press service has said.
In order to boost Moldovan-Serbian cooperation, Tarlev and Tadic agreed to work out a series of economic documents aimed at mutually promoting investment and avoiding double taxation. The documents were expected to be signed during an upcoming visit to Chisinau by Serbia-Montenegro President Svetozar Marovic.
Tarlev welcomed the intention of the Serbian business circles to open a representation of the Trade and Industry Chamber in Chisinau and said that, for its part, Moldova is also planning to set up a trade chamber in Belgrade.

Moldova, Japan sign US$2.7m loan agreement

The Moldovan government recently signed a US$2.7m loan agreement on small business development with Japan. The agreement was signed in Chisinau by Moldovan Deputy Economics Minister, Vasile Mamaliga, and the Kiev-based Japanese ambassador to Moldova, Kishichiro Amae.
The funds offered by the Japanese government will be used to buy agricultural and industrial equipment that will later be sold to entrepreneurs on leasing conditions.
The organization which will manage the loan has not been selected yet, but it has to be approved by both Tokyo and Chisinau in the near future, Mamaliga said.
So far, Japan has offered Moldova non-repayable loans worth US$37.2m as part of different projects. Meanwhile, Moldova's debt to the Japanese government stands at US$26m.

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