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MOLDOVA

NEWS REPORT
 

 

In-depth Business Intelligence

Key Economic Data 
 
  2002 2001 2000 Ranking(2002)
GDP
Millions of US $ 1,621 1,500 1,300 144
         
GNI per capita
 US $ 460 400 400 162
Ranking is given out of 208 nations - (data from the World Bank)

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REPUBLICAN REFERENCE

Area (sq.km) 
33,843 

Population 
4,439,502

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

Capital 
Kishinev 
(Chisinau)

Currency
Leu (plural: Lei)

President 
Vladimir Voronin

  

Update No: 287 - (29/11/04)

Voronin congratulates Bush on victory
President Vladimir Voronin on 4th November sent a congratulation message to his US counterpart George W. Bush on his re-election as president. Voronin wrote that he is firmly persuaded that under Bush's leadership "the United States will continue to head international efforts for forging a more equitable, more prosperous, and a more stable world based on the values of democracy and the equality of all countries." 
He said this would "require the coordination of efforts by large as well as small states to be able to cope with the threat posed to the free world by international terrorism, the proliferation of weapons of mass destruction, xenophobia, separatism, underdevelopment, poverty, and other dangerous aspects." 
Voronin pledged that Moldova will "continue being a trustworthy ally" in this struggle, proof being "the participation of Moldovan soldiers in the reconstruction process in Iraq." He expressed the hope that Moldova would be admitted in 2005 into the Millennium Challenge Account initiative. 
Voronin has more than one reason for wanting closer co-operation with the US. Above all he wants its help in dealing with his own 'terrorist' enemies. 

US and Italy take the lead to help solve Transdniestr headache
Transdniestr -- populated mainly by Russian and Ukrainian 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. It effectively broke away from Moldova after a 1992 war that left more than 1,500 dead before ending in a truce.
Reunification talks between Moldova and the rebel province have been suspended since July, when separatists closed two Moldovan-language schools in the region. One of the schools has since been reopened, but Moldova's President Vladimir Voronin is refusing to continue direct talks with separatist leader Igor Smirnov. 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.
Transdniestr is not recognized internationally, but receives support from Russia. Moldova has opposed restarting negotiations with Transdniestr in the current format, with the talks mediated by Russia, Ukraine and the Organization for Security and Cooperation in Europe. Moldova is unhappy that Russia and Ukraine often side with the separatists, who after all are Russians and Ukrainians and wants more European involvement in the settlement talks.
President 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; while Moldova applies the terms of the agreements signed, Transdniestr ignores them in 99 % 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.
Stepping into the breach, Pierferdinando Casini, Italy's Chamber of Deputies, said on November 5th, at a meeting with his counterpart in Moldova, Eugenia Ostapciuc, that the EU considers "the Transdniestr conflict as a possible threat to the stability of the region and to international security. We are concerned by the halting of talks and the recent escalation of tensions between the two sides." Italy would act as Moldova's advocate to help the former Soviet country in its European integration.
The EU's new ambassador in Moldova echoed Casini's comments. "The EU wants to play a more active role in the settlement of the conflict," said Ian Boag, after meeting with President Vladimir Voronin. Boag added that the EU and Russia can discuss the Transdniestr conflict without getting into a "geopolitical conflict." 

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 retreated 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 State, 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 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. But after it gained independence in 1991, Moldova's economy collapsed in the absence of the centralized Soviet era market.

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 said most of the US$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 said. 
"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 per cent in 2001 to 20 per cent this year, and is set to decrease to 18 per cent next year. He says the underground economy was already reduced from up to 65 per cent in 2001 to some 30 per cent 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 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 [US$13] per month. But now I get 400 leis [US$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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CENSUS

First-ever census in Moldova's breakaway region


A census took place in Moldova's breakaway Dniestr region from November 11th to November18th, Basapress News Agency reported. 
Local residents who were visited by census takers told Basapress that questionnaires registered personal data, citizenship, nationality, housing conditions, their native language and spoken language, social and marital status, religion, education and occupation. 
Tiraspol's official Olvia-press News Agency reported that the census on the left bank of the Dniestr river was financed "exclusively from the region's own resources and funds." The data obtained in the census will be used only on the territory of the region. According to Olvia-press, each of the 1,800 pollsters involved will have registered around 350 urban residents and 300 villagers. A special census form was assigned for those who reside in the Dniestr region temporarily and live permanently abroad. Preliminary results of the census will presumably be made public in December, and final results will be announced in half a year, Olvia-press says.

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FOREIGN TRADE

Moldova reports increasing trade

Moldova posted foreign trade figures of US$1.917bn in the first nine months of 2004, which is 30 per cent higher than in the same period last year, the Statistics and Sociology Department said, Basapress News Agency reported.
According to the department's monthly report, Moldova's exports grew by 29.1 per cent to US$701.4m, while imports soared by 31.2 per cent to US$1.215bn. Experts describe the increases as dynamic. 
Moldova's exports to CIS member countries increased by 21 per cent to US$356.5m, to the European Union by 50 per cent (US$215.0m), to Central and Eastern Europe by 8.2 per cent (US$76.5m). Meanwhile, imports from CIS increased by 34.5 per cent (US$529.9m), from the EU by 22.8 per cent (US$404.5m) and from Central and Eastern Europe by 43.5 per cent (US$131.8m).
Moldova's exports to the CIS member countries amounted to 50.8 per cent, the EU - 30.7 per cent and the Central and Eastern Europe - 10.9 per cent. Imports from CIS reached 43.6 per cent, the EU - 33.3 per cent and the Central and Eastern Europe - 10.8 per cent.

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