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Books on Moldova
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
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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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