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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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Update No: 319 - (26/07/07)

Luxembourg to the rescue
It is difficult to imagine two countries in Europe that are less alike than Luxembourg and Moldova. The former is a Grand Duchy, with a hereditary ruler and is the richest country on the continent by a long way, with only a third of a million inhabitants, yet a per capita income of over US$300,000 on average, which of course is extremely uneven, between the well-heeled bankers and the like and the rest. The latter is the poorest country in Europe now, with an impoverished population of small farmers and shopkeepers. 

Luxembourg is one of the smallest countries of Europe, where over 200 banks are working, and is the country with the greatest concentration of banks in the European Union. At the same time, this country gives the highest minimum salary in EU - 1,570 euros monthly. That would be a small fortune in Moldova.

Specialists from the Moldovan banking and financial fields will have the chance to be trained by competent specialists from Luxembourg, among the best in the world. President Vladimir Voronin and Deputy Premier, Foreign Affairs and Immigration Minister of the Grand Duchy of Luxembourg Jean Asselborn, on an official visit to Chisinau, discussed the above issue at a meeting in mid-July, according to the presidential press service. 

The head of the Luxembourg diplomacy referred to his country's intention to join the Common European Union Visa Issuing Centre starting 1 January 2008, as well as to support Moldova to train specialists in the banking and financial areas. 

President Vladimir Voronin stressed the importance of the visit by the deputy premier of Luxembourg to give an impetus to the Moldovan-Luxembourg dialogue in diverse fields. The head of state also emphasized the significance of the discussions held with the Luxembourg officials within his recent visit to the Grand Duchy of Luxembourg, in order to deepen and extend both the bilateral relations between the two states and the ones on the dimension of Moldova's European integration. 

For his part, Jean Asselborn appreciated the efficiency of the visit paid to Chisinau. In this respect, Jean Asselborn highlighted the fact of signing the convention between the Moldovan and Luxembourg governments on the avoidance of double taxation and prevention of fiscal dodging as regards taxes on income and property. 

The Luxembourg official appreciated Moldova's intense cooperation with the European Union (EU) within the Moldova-EU Action Plan. Jean Asselborn also said that the development of the existing relations is both in Moldova's and in EU's interest. 

Referring to the Transnistria-related problems, the head of Luxembourg diplomacy underlined the importance of continuing the negotiations in the 5+2 format, and described this format as an ideal framework to bring a lasting solution to the conflict. 

The president appreciated the consistent dialogue which has been established over the last two years between Moldova and EU, which allowed the implementation of some new projects in the European practice, such as the setting up of the Common EU Visa Issuing Centre and the organisation, through the EU Border Assistance Mission, of the international monitoring at the Moldovan-Ukrainian border, including its Transnistrian segment. 

Vladimir Voronin reaffirmed the Moldovan authorities' intention to firmly follow the course of Moldova's European integration, stressing that the support of Luxembourg - an EU founder country - is very important for Moldova's advancement towards achieving its European aspirations. 

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PMR property reform seen as way to more economic freedom for poor
There is quite a different approach being tried in at least one key province in Moldova, with one third of its economy in the old days, Transnistria. It is a grass-roots-up rather than a top-folk-down programme which has had much to recommend it whenever applied elsewhere. It is gratifying that Moldova should now be regarded as a suitable laboratory for new ideas.

The backers of a new law on private property reforms see it as a way to boost economic freedom. Aimed at giving the poor and rural population legal title to their homes, it is based on a wealth creation roadmap by Hernando de Soto. The Peruvian economist specifically had post-Soviet countries in mind when he developed the plan. Curiously he is a former banker too, but a rather different one from the gilded Luxembourgeois.

Now the Russian- and Ukrainian-inhabited enclave on the left bank of River Dniestr, Pridnestrovie (its other name), is implementing his ideas. A new law aimed at bringing private property into the hands of the poor is seen by its backers as a way to give a boost to grassroots wealth-creation in Pridnestrovie. It could lead to dramatic political developments too.

The key man behind the new rural property registration law is MP Mikhail Burla, a Tiraspol-based economist and second-in-command of the opposition party, Renewal, which is currently in control of parliament. It follows a wealth-creation roadmap by Hernando de Soto, the former head of Peru's Central Bank. This may yet come to be regarded as the blueprint of the enclave's independence by giving it an alternative to being in the future merely a part of an economically failed state with the poorest economy in Europe. 

"Since the fall of the Berlin Wall in 1989, most developing and former Soviet nations have tried to move towards some form of market economy. There has been little success," says Hernando de Soto.

"This widespread failure has created bitter disappointment amongst the poor and has provided an opening for opponents of reform, globalisation, and free enterprise who charge that market economic systems bred widespread corruption, a rise in crime, a new class of 'haves', and disrespect for the law."

Western thinkers have blamed this on everything from these countries' lack of sellable assets to their inherently non-entrepreneurial "mindset." However, the real problem is that such countries have yet to establish and normalize the invisible network of laws that turns assets from "dead" into "liquid" capital, believes Hernando de Soto, whose ideas have influenced one of the latest laws from Pridnestrovie's parliament.

Praise from both Putin and Bush 
In the West, standardized laws are in place to mortgage a house to raise money for a new venture, permit the worth of a company to be broken up into so many publicly tradable stocks, and make it possible to govern and appraise property with agreed-upon rules that hold across neighbourhoods, towns, or regions. This invisible infrastructure of "asset management" is the missing ingredient to success with capitalism, insists de Soto. But even though that link is primarily a legal one, he argues that the process of making it a normalized component of a society is more a political - or attitude-changing - challenge than anything else.

Hernando de Soto's proposal is to register poor peoples' assets, even if it's no more than a tarpaper shack in a slum. Giving even the smallest title to property gives people a leg up and something to propose as collateral for small loans. His analysis of poverty says that when people have no title deeds to land or to other properties that they possess, they have no access to credits or to markets.

Praise for his proposal has come from across the political spectrum - from both Vladimir Putin and George H. W. Bush.

Ronald Coase, winner of the Nobel Prize in economics, has called Hernando de Soto's work "powerful and completely convincing" and de Soto has been awarded with both the Milton Friedman Prize and with the Templeton Freedom Prize.

In December of last year, The Economist gave him its Innovation Award for the promotion of property rights and economic development. 

One of the world's two most influential think tanks 
Hernando de Soto, who used to run Peru's Central Bank, is an economist whose specialty is the informal economy: The economy which is unregistered and nominally outside government control. He is the president of Peru's Institute for Liberty and Democracy (ILD), considered by The Economist as one of the two most important think tanks in the world. Son of a Peruvian diplomat, he was educated in Switzerland where he did post-graduate work at the Institut Universitaire de Hautes Etudes Internationales in Geneva.

Two magazines, Time and Forbes, have both chosen Hernando de Soto as one of the leading innovators in the world, and more than 20,000 readers of Prospect and Foreign Policy ranked him as one of the world's top 13 "public intellectuals."

Along with former U.S. Secretary of State Madeleine Albright, Hernando de Soto is co-chair of the Commission on Legal Empowerment of the Poor which works under the auspices of the United Nations Development Programme (UNDP).

His institute provides heads of state with a straightforward and non-ideological explanation for why even the most well-intentioned market reforms will fail: their nations lack a property law that is accessible to the poor and that allows both physical and intellectual assets to be converted into capital.

"People go hungry because they haven't enough money to buy food, but also because their capacity to grow it has been drastically reduced," says U.S. political scientist Susan George of the Helsinki Process on Globalisation and Democracy, which is run by the Ministry for Foreign Affairs of Finland to bring in different stakeholders to promote development.

Link between economic freedom and wealth creation 
The crucial role of these economic liberties for overall freedom - as well as the wealth of nations - was recognized long ago by John Locke, David Hume, and Adam Smith. Poor protection of economic freedom causes stagnation and poverty.

Economic freedom is especially important to the young, the new entrepreneurs, and the economically and politically weak. Secure property titles and their expedient and unbiased enforcement protect the weak, who rely on low transaction costs to make use of their assets. Hernando de Soto has shown in numerous case studies that the poor in the post-Soviet countries own much wealth. At the same time, they cannot use their assets effectively until the government formalises and protects their titles.

"If political interference with economic freedom is widely tolerated, it will not only produce injustice, economic stagnation, political instability and social conflict. It will also destroy popular support for both democratic government and capitalism," says Wolfgang Kasper, a longtime Professor of Economics at the Australian Defence Force Academy.

"For the entire Third World and the former Communist countries, de Soto's calculation is that the total value of all the real estate held, but not legally owned, by the poor is more than 20 times all direct foreign investment and more than 90 times all the foreign aid," says Thomas Sowell, a senior fellow at the Hoover Institution in the United States.

"The amount of wealth available within Third World countries themselves vastly exceeds anything that the prosperous countries have given them or are likely to give them," says Sowell, adding that this is a way to jumpstart grassroots capitalism because "many American businesses were begun by someone who borrowed the money to get started, using his home as collateral."

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FOREIGN AGREEMENT

Agreement to share assistance with Lithuania 


Lithuania would share its assistance obtained from the North European countries with Moldova, Lithuanian Speaker, Viktoras Muntianas, recently said at a plenary meeting of the Moldovan Parliament, Mold press reported. 
A Lithuanian delegation, headed by Lithuanian Speaker, Viktoras Muntianas, paid an official visit to Chisinau, which included meetings with Moldovan top officials and the Lithuanian community in Moldova, as well as an excursion to the cultural and historical compound, Orheiul Vechi. 
The visiting Lithuanian official assured the Moldovan Members of Parliament that "Lithuania is Moldova's partner which keeps on reminding the European Union" about Moldova's problems and does it's utmost to settle them. "The key to getting Moldova closer to the EU is in your country. You should do your best for the full implementation of the Moldova-EU Action Plan and for the transparent absorption of the EU's financial support," Muntianas was quoted as saying. 
The speaker of the Lithuanian Seimas stressed that in the near future, "there are to be identified new ways for strengthening Moldova's relations with the EU," after the Partnership and Cooperation Agreement expires in 2008. The Lithuanian official hailed Moldova's achievements in getting the EU autonomous trade preferences, the signing of the agreements on simplifying the EU visa regime and readmission and opening of the Common EU Visa Application Centre in Chisinau. 
Referring to the Transnistrian issue, Viktoras Muntianas was quoted as saying: "Lithuania is sure that Russia should honour its commitments assumed at the Istanbul Summit and withdraw its troops from Moldova's territory." Moldovan Speaker Marian Lupu told journalists that jointly with his Lithuanian counterpart, he considered a wide range of problems, among which the inter-parliamentary dialogue. The speaker stressed that the dialogue improved over the last two years. Lupu underlined that within the Lithuanian speaker's visit, "there will be set a series of goals and priorities for the next years."

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