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MOLDOVA


 

 

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: 316 - (26/04/07)

What constitutes Moldova?

The most vital question for any state is its territorial integrity; what are its borders?

The big issue here in Moldovan politics is that of Transnistria, the largely Russian- and Ukrainian-populated enclave on the left bank of the Dniester River. Moscow has proposed a new solution, amounting in effect to independence.

Transnistria has a very bad reputation as a haven for gangsters, arms dealers, smugglers and crooks. This has jaundiced most people against its desire for independence. The Russians, however, can take that sort of thing in their stride.

As a matter of fact, Transnistria has never been part of an independent Moldova at any time in history. Its formal inclusion in Moldova in Soviet times was a hangover from the infamous Nazi-Soviet Pact, that in 1940 allowed the USSR to gobble up the Baltic states and Bessarabia, today's Moldova on the right bank of the river Dniester.

Voronin under pressure to accept Russian plan for Transnistria
Moldova is negotiating under multiple pressures, some generated by Russia and some self-generated. Moscow and Tiraspol are stonewalling the negotiations on Transnistria. Russia's politically motivated embargo on wine exports imposed last year has pushed an already pauper Moldova to the brink of recession; while Moldova's own failures to attract investments and diversify its export markets are aggravating the Russian embargo's impact. The president and the Communist Party in power since 2001 (re-elected in 2005, with 56 seats in the 101-seat parliament, that elects the president) badly need to come up with some achievements to show in next year's parliamentary election campaign.

Voronin is increasingly anxious to reunite his native Transnistria, the industrial centre in Soviet times, with the rest of Moldova during his remaining time in office (two years arithmetically, though clearly less than that in practice). Moldovan officials feel -- not entirely without justification -- that Western support is too ineffective to attain that goal in the near- or even medium term. Thus, some officials fall back on the traditional reflex of seeking a deal with the Kremlin -- a reflex of which these same officials had seemed cured during the period of heady hopes in 2004-2006. The present situation leads them to supplicate for Putin's goodwill and thus to link their hopes to Russia's presidential-election calendar.

Thus, Voronin seems very keen on reaching a bilateral accommodation with the Kremlin, given the less than two years to go in his final presidential mandate. He is worried about his place in the country's history, if he fails to effectively address the country's main problems -- deep poverty and the Transnistria conflict -- toward the end of his eight-year presidency. Thus he seems tempted at this time to stake on Putin for illusory solutions on both counts.

The Russian scenario
In several policy conferences with a small number of top officials in recent days, most recently on April 11th, Voronin has presented a new Russian scenario to settle the Transnistria conflict. It stems from Russia's Security Council, whose deputy secretary, Yuri Zubakov, runs the Russian side of the Russia-Moldova negotiating channel, outside the official 5 + 2 format. 

The proposed scenario forms part of attempts to change beyond recognition the "package deal" that top presidential adviser Mark Tkachuk and Reintegration Minister Vasile Sova proposed through that channel in recent months. That package could settle the conflict on terms consistent with Moldova's independence and European orientation. Without taking a clear position on that package, and holding out the theoretical possibility of accepting it later, Moscow is trying to pressure Voronin into initiating anti-constitutional steps now, ostensibly to facilitate implementation of at least some elements from that package later.

Voronin read out the salient points from a set of Russian-language documents during these latest policy conferences. The first document paves the way for a joint declaration by Voronin and Transnistria "president" Igor Smirnov regarding parallel self-dissolution of the Moldovan parliament and Transnistria Supreme Soviet and the calling of new elections. The two chambers would vote to adopt this document.

Under a second document, right-bank Moldova and Transnistria (on the left bank of the river) would hold parallel but separate new elections by November 2007 (Moldova's elections are not due until March 2009). The Moldovan Parliament would set aside 18 to 19 seats (out of 101) for deputies from Transnistria, proportionately to the latter's population. Transnistria would also be represented in Moldova's central government by a first deputy prime minister and deputy ministers in each ministry, to be delegated by Tiraspol.

All this would require substantial changes to the Moldovan constitution. Moreover, this scenario seems tacitly to permit the continuing existence of Tiraspol's army and security services, basically Russian structures on Moldova's territory.

In accordance with the third document, Moldova would "guarantee" to maintain its existing status of permanent neutrality, not join NATO, and rule out the stationing of troops other than Russian ones on Moldova's territory. For its part, Russia would withdraw its troops within two years, provided that the political elements of this "settlement" are implemented. However, those transitional two years could offer Russia ample opportunity to create new reasons for keeping the troops in place. Russia had obligated itself in 1993 to withdraw all the troops from Moldova by 1996; and again in 1999 to withdraw all the troops by 2002; but found ways each time to repudiate those obligations.

Those three elements would irreparably damage major parts of the Moldovan-proposed package deal. The package did not envisage overturning Moldova's constitution, dissolution of the Moldovan parliament, numerical quotas of Tiraspol appointees in Chisinau, a "temporary" acceptance of Russia's military presence, or legitimising Igor Smirnov's regime through a joint declaration with him by the democratically elected Moldovan president.

Procedurally, it is envisaged that Russia and Moldova would first agree among themselves on how to proceed, whereupon they would officially inform the other members of the official negotiating format (the United States, European Union, OSCE, and Ukraine) and request their endorsement pro forma. In this way, the 5 + 2 format's circumvention would be crowned with a fait accompli on Russian terms.

To help launch a political process toward implementation, Chisinau would invite Russian Minister of Foreign Affairs Sergei Lavrov to visit Moldova soon, to reciprocate his Moldovan counterpart Andrei Stratan's visit to Moscow last week. The Moldovan presidency is keen to receive Lavrov in May, hoping that a meeting between Voronin and Russian President Vladimir Putin could follow and bless the plan publicly.

This scenario seems unrelated to Stratan's talks with Lavrov in Moscow last week. That visit raised the possibility that Chisinau could transfer the negotiating authority from core members of the presidential team to the Ministry of Foreign Affairs. However, the scenario just discussed at the presidency in Chisinau indicates that the bilateral channel to Zubakov remains the primary one at least for now. While Lavrov's MFA handles the negotiations in the 5 + 2 format and has driven them into deadlock, Chisinau wishes to believe that Zubakov's Security Council team is more flexible and less "dogmatic" than the Russian MFA.

Clearly, the Russian side does not negotiate in good faith through either of these two channels. Zubakov's primary goal is apparently to misuse his channel in order to erode and degrade Chisinau's package-deal proposal, adding conditions and procedures that would ultimately nullify its value.

Mixed feelings among Moldovans on Transnistria's right to independence
Moldova's political parties have mixed feelings about the right of Pridnestrovie (Transnistria) to independence. Patria Moldova urges the authorities to immediately recognize Transnistria's independence. Hardline hawks in mainland Moldova dismiss this.

A political debate among political parties in Moldova has in fact long divided the country's politicians on the issue of Pridnestrovie's right to self-determination and independent statehood. The new and emerging country, which is better known as Transnistria or Transdniester, declared independence in 1990. Its independence was never recognized by Moldova, which pursues a 17-year old territorial claim on the small country, twice the size of Luxembourg, and considers it part of Moldova due to its incorporation inside the Moldavian SSR (MSSR, until 1991 a part of the Soviet Union).

"I call on the President of Moldova, Vladimir Voronin, and on parliament and the government of Moldova, to immediately recognize the independence of a de facto second Moldovan State, the Pridnestrovian Moldavian Republic, and thus resolve the Transnistrian issue once and for all, and then seek good neighbourly relations in all spheres of life: economic, political, social, and building capacity for a future Moldovan confederation," said the leader of the Patria Moldova party, Andrei Tarna.

According to him, the only way viable solution which has been presented to date for solving the Moldovan-Transnistrian conflict is the recognition by Moldova of the independence of Pridnestrovie; known in Moldova by its Romanian name, Transnistria." Moldova must do so in the first place. This is the first step. Then, when normal relations are restored, it can be possible to talk about a federal state on a mutually agreeable basis," says the leader of Patria Moldova.

Hardliners unwilling to compromise 
Tarna's proposal was received in Chisinau with mixed reviews. Oazu Nantoi, a hard-line anti-independence hawk turned spin-doctor, dismissed it outright, as did members of Moldova's ruling Communist Party. Others, such as the former mayor of Chisinau, were willing to consider some aspects of the plan, but only pending the outcome of negotiations between the two sides.

"The plan, in my opinion, is premature. For seven years, the two sides have not really sat down together at the negotiating table in a serious way. And I think what is most important today, and that is where it must begin, for the process of status settlement, is the resumption of negotiations," Moldovan MP Serafim Urechean was quoted as telling news agency Regnum earlier this week. 

Member of Moldova's Parliament Serafim Urechean, the former mayor of Chisinau, is the leader of the Party Alliance Our Moldova (Partidul Alianta Moldova Noastra), a liberal political party in Moldova. He sees some positive aspects in Tarna's proposal, but thinks it should be handled during face-to-face negotiations between both sides to the conflict.

"All of the plans for Transnistrian settlement which have been proposed to date have some positive sides. But, the fact is that any plan proposed by anyone from outside the government would not be acceptable at this stage. The Voronin Administration has, for the past seven years, undermined any possibility of a negotiated settlement and of any compromise solutions. But I think that any solution must come about as a result of negotiations. So first, hold talks and then determine the settlement plan that is agreeable to both sides. Because any plans which are proposed in advance of actual negotiations would be unacceptable to either side."

"Observer countries to the Transnistrian settlement negotiation process should ensure that the parties, Moldova and Transnistria, come together at the negotiating table," says Urechean. "But in my opinion, Vladimir Voronin never really wanted a settlement. Immediately, ever since he came to power in 2001, he transformed the conflict into his own personal rivalry with Igor Smirnov. While both Smirnov and Voronin are in power, nothing will change."

Supporters of Urechean see him as a politician who can break the deadlock and see the Alliance as a social-liberal hope for a new democratic Moldova. Its party symbol depicts a sunrise with the phrase "Moldova Noastra" at the bottom. It was established as a party in 2003 as the merger of the Social-Democratic Alliance of Moldova, the Liberal Party, the Independents' Alliance of Moldova and the Democratic Peoples' Party of Moldova, a party established in 1997 as opposition to the Communists.

Moldovans on the left bank support independence 
With few exceptions of ethnic Moldovans who reside on the left bank - in Pridnestrovie - support the country's independence and want to see it become recognized internationally, or so it is claimed.

"I like the approach of Patria Moldova for conflict resolution," says the head of the Transnistrian Union of Moldovans, Valerianus Tulgar, an ethnic Moldavian born in what is today the territory of Pridnestrovie.

"The idea is very good. All right, first Moldavia should recognize Transnistria, and then you can take the talks to new grounds," he told news agency Regnum on 17 April. "In fact, I myself proposed a similar idea as early as 2004 on behalf of the Union of Moldovans in Transnistria," said community leader Tulgar. "Even back then I said that first, Moldova should recognize Transnistria as a sovereign and independent state, and only then would it be possible to build good neighbourly relations. But, with this I am not talking about a confederation. I believe that we need to find a number of areas to agree on in the economic field and related to customs, on the free movement of persons across the border of Moldova and Transnistria, just like Russia and Ukraine did before Leonid Kuchma left the presidency. But first, it all starts with Moldova recognizing Transnistria."

"If we look at the feasibility of the plan, I would point out that Andrei Tarna is only presenting this plan on behalf of a minority political party. If such a plan was sponsored by the legislature or by the executive branch of Moldova then, it would be taken more seriously. Or, if the plan would be signed by a majority of the other political parties in Moldova, then it could also be seen as having a real future," says the leader of the Union of Moldovans in Transnistria. "But right now, in Moldova, the Communist Party is in power. And while they hold all the key levers of government, the plan will just remain a plan."

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BUDGET SURPLUS

Budget has surplus of 0.9% of revenue in 2006

Revenue to the Moldovan state budget grew 23.1 per cent to more than 11.11 billion lei (US$854.9 million) in 2006, while expenditures increased 29.9 per cent to 11.01 billion lei, Moldovan Finance Minister, Mihai Pop, said, Interfax News Agnecy.
The Moldovan budget thus had a surplus of 100 million lei (US$7.7 million), or 0.9 per cent of total revenue. Budget revenue exceeded the planned level by 1.8 per cent despite the negative impact external factors had on the Moldovan economy, Pop said. 
Actual spending totalled only 97.7 per cent of the planned level. "Almost half the expenditures (40.4 per cent) were for social and cultural purposes. The economy accounted for 15.7 per cent of spending (1.73 billion lei)," he said. Moldova's foreign debt stood at US$718.2 million at the start of 2007, while domestic debt was 3.79 billion lei (US$291.5 million). "The share of state debt in GDP was 29.6 per cent" in 2006, down 2.8 percentage points from a year earlier, he said. In approving the finance ministry's activities for 2006, the government noted "debt to the state budget of more than one billion lei, including 815 million lei in arrears on taxes and fees," he said. The Moldovan budget is to have revenue of 12.088 billion lei (US$929.8 million) in 2007 and expenditures of 12.161 billion lei (US$935.5 million) with a deficit of 72.9 million lei (US$5.6 million), or 0.6 per cent of expenditures.

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FOREIGN LOANS

World Bank to allocate US$16m for roadwork 

The World Bank will issue Moldova a loan for US$16 million in 2007 to support road reconstruction programmes in the country, the World Bank's permanent representative office in Chisinau said, Interfax News Agency reported.
A representative of the office said that the loan would be issued for 40 years with a ten-year grace period at an annul 0.75 per cent interest rate. The funds will be used to help lower transportation expenditures by improving the quality of roads. A four-year project has been launched to support this programme. Andreas Schliessler, the World Bank's coordinator of the project, told journalists that 67 per cent of Moldova's 3,666 kilometres in federal highways are in unsatisfactory condition. The bank will provide the money to the government to above all complete a programme in the area of road maintenance and then directly for the reconstruction of roads and technical assistance, he said. Some US$50 million in total are to be allocated for the support of programs in Moldova. In addition to the World Bank, the European Bank for Reconstruction and Development (EBRD) and European Investment Bank will provide funds to Moldova for these programmes.

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