skip to main |
skip to sidebar
Let us help plucky Moldova | The SpectatorNow that the post-Cold War era has ended it is hard to find small, inspirational states who seek to cement a new-found independence and yearn for what the West has to offer. Georgia looked like such a state until Russian aggression and Tblisi's behaviour put an end to the country's westward journey. Ukraine is too big, and too bolshy to count. Belarus is happy in Moscow's embrace.
But one country still fits the bill - Moldova. Sandwiched between Ukraine and Romania, Europe’s absolute poorest country is undergoing a new political spring after the recent elections. A new, Western-minded, youthful coalition government has replaced the old-style communists. It faces enormous challenges, not least from a well-entrenched, Russian-backed secessionist province, and a forthcoming constitutional crisis.
But its ministers are approaching their task with a vigoUr and useful naiveté that all reformers need and which has long since been lost elsewhere on the EU's Eastern borders. They want to be part of Europe, and they want to build their state. Having inherited a 16.5 GDP deficit, the government has managed to push it down to 7.8 (HM Treasury, take note please). Crucially, they seem to have learnt from Georgia's mistakes. They are not trying to militarise their internal conflicts. Nor are they looking to antagonise Russia or join NATO.
But they are looking for the EU’s help. So far, the Chisinau government has received a trickle of support rather than flow needed. To that end, they are compelled to turn to China for loans.
Europe should, however, look to do more and quickly. Governments that want to join the West are today few and far between. Most, like Ukraine, are torn, or, like Belarus, uninterested. The Moldovans are different – and willing to reform. They should be helped.
The new government may not last. Late last year, the Moldovan parliament failed to elect a president, with the coalition’s candidate blocked by the Communist Party. Normally, that would trigger the holding of early elections later this year. If elections are held, the coalition will need some record of performance to ensure that they repeat their success. Letting the Communists back in would be a step backwards worse than Viktor Yushchenko’s election in Ukraine.
So European governments should lend assistance. They should offer the prospect of visa-free travel, at least to students and young people, into the EU. Later this year, Albania is likely to be given visa-free travel into the EU. Every day, Albanians are deported from Britain for violating their terms of stay. The Home Office reports nothing comparable with Moldovans staying in the UK. They come, keep to the rules and go back when their visas expire. Then EU governments should examine ways to help get Russian “peacekeepers” out of break-away Transnistria, perhaps to be replaced by a hybrid EU-Russian civilian mission.
Western-oriented Moldova deserves Europe’s help. It may not be the biggest foreign policy issue. But it’s a good one.
Filed under: Europe (124 more articles) , Foreign Policy (82 more articles) , Georgia (3 more articles) , International politics (118 more articles) , Moldova (1 more articles) , NATO (26 more articles) , Russia (32 more articles) , UK politics (1125 more articles) , Ukraine (1 more articles)
Moldova's new government gets good marks for anti-crisis reforms - BUSINESS NEW EUROPEMoldova's new government gets good marks for anti-crisis reforms
Graham Stack in Kyiv
February 22, 2010
Moldova has had a good crisis politically, but there is still turbulence ahead in 2010.
The crisis may have come at the right time for Moldova. It helped unseat a stagnating Communist Party administration led by the then-president Vladimir Voronin and gave the incoming government of Prime Minister Vlad Filat a mandate for reforms urgently needed for long-term development. Now, the small republic has signed off on a $574m International Monetary Fund (IMF) package that should shore up its economy in 2010.
Like the rest of the countries in the region, Moldova grew and grew through most of the noughties – mostly due to booming consumption, though not fuelled by cheap credit as much as by employment abroad. From 2000-2008, growth averaged 6%, poverty fell impressively and remittances from Moldovans working abroad hit 30% of GDP in 2008.
After a brief reform bout at the start of the decade, this easy growth led to a slackening of the reform drive and the economy remained overregulated, hampered in particular by price distortions, and unable to create new jobs. The crisis exposed the country's vulnerability, with remittances falling by 40% in 2009. As a result, GDP collapsed by 8.5% in 2009 and household consumption by around 12%. Meanwhile, a bitter election campaign resulting in a hung parliament after disputed elections in April, then rerun in July, meant meaningful steps to counter the global economic crisis were delayed in favour of populist spending by the then governing Communist Party.
This meant that when the new government under PM Filat finally took office in September, the budget deficit was set to hit 16% of GDP. But the Communists were replaced by the right people at the right time – Filat headed a liberal reforming coalition called Alliance for European Integration, favoured by the urban population, and who had a mandate to push on with market changes. "The government has pursued the right policies," says Valeriu Prohnitchi, director of Chisinau's Expert Group. "They have done what could be done rapidly, dismantling trade barriers, liberalizing markets such as the meat market by removing price controls. They froze salary increases for state employees, which was a difficult, but correct, choice. They raised public services prices to reach cost-recovery level, and the National Bank has switched to inflation targeting."
As result of these measures, the government managed to cut the budget deficit for 2009 to 7.8%, and this is due to fall to 7% in 2010. Moreover, there have been important institutional reforms that should bring lasting improvements. For instance, authority for setting energy prices has been passed to an independent regulatory agency.
All this has ticked the right boxes with international financial organisations. "In my view, the government has reacted quickly to respond to the crisis. The results have been impressive but, of course, there is still much to be done," Melanie Marlett, the World Bank's country manager for Moldova, says on her website.
Moldova has also made some important gains in terms of European and international integration. On January 12, the government initiated negotiations with the EU on a new Cooperation Agreement. On January 22, Filat signed the $262m Millennnium Challenge Corporation Compact with US Secretary of State Hillary Clinton. And on January 29, the IMF board approved a $574m program of support. "The IMF aid is crucial, because without it Moldova would have defaulted. It also gave a positive signal to other investors," says Prohnitchi.
Bumps in the road
The outlook for 2010 is still cloudy. Besides remittances from abroad, Moldova's economy has traditionally been dependent on wine exports to Russia. These were cut off in 2006 for political reasons, and though the informal embargo was lifted in 2008, much will depend on how quickly exports recover this year. "Wine exports will also be critical, but there is now a lot of bureaucracy in place, and the new customs union (between Russia, Belarus and Kazakhstan) interrupted wine exports at the start of this year," says Prohnitchi. "But some of our wine producers are diversifying to western markets."
The outlook for remittances is also unclear. Migrants have not, as was feared, come flooding back. Instead, they cut the amount of money they sent home. Recovery in the host European countries would allow remittances to bounce back up, though Moldovan migrants are concentrated in the South European economies of the so-called PIGS – Portugal, Italy, Greece and Spain - as well as in Russia. The PIGS are currently under pressure from spiralling budget deficits and debt burdens.
Another cloud on the horizon, says Anatol Gremalschi of the Moldovan think-tank Institute for Public Policy, are rising prices for Russian gas, which are scheduled to reach European levels by 2011.
Prohnitchi concludes that while there are some signs of the economy bottoming out, the long-term picture is unclear. "There are many risks depending on foreign markets. If the crisis worsens or stays the same there, Moldova will suffer. Our prognosis for 2010 is 1.5% growth, although the [European Bank of Reconstruction and Development] has forecast 4%," he says.
Furthermore, while the government has done good work, political instability may undermine progress in 2010, according to Gremalschi. Moldova remains locked in a constitutional crisis without an elected president since July. Moldova's unique constitution sees the president elected by a three-fifths majority of the unicameral parliament. But the governing liberal coalition falls one MP short of the 61 votes needed, and the now-oppositional Communists have refused to compromise on a candidate. Moldova thus has only an acting president, Mihai Ghimpu, whose day job is speaker of parliament. Various projects have been mooted to change the constitution, but none seem viable. "This means that we are condemned to have parliamentary elections again in 2010," says Gremalschi, "but no one knows when."
The risk for the current government is that a backlash against unpopular, but necessary, budget reductions and price liberalization, could cause them to lose votes at the parliamentary elections later this year. "People see the new alliance, and see the new prices," sighs Gremalschi. "It's a natural reaction."
Fence between countries to be melted - UPI.comCHISINAU, Moldova, Jan. 21 (UPI) -- The barbed-wire fence along the border of Moldova and Romania will be dismantled and the metal melted for a bridge between the countries, officials said.
Moldovan Prime Minister Vlad Filat said the fenced border with a "friend country" in the 21st century, when people freely travel Europe, is "embarrassing," the Romanian Web site HotNews.ro reported Thursday.
Several local mayors, however, said they wanted to keep the fence in certain places, either for ecological reasons or concerns about the safety and protection of citizens.
Filat signed a measure on Jan. 9 ordering the fence's removal. Details of dismantling it are to be determined by the end of the month.
US Dept of State - Hillary Rodham Clinton - Remarks At Millennium Challenge Corporation Signing Ceremony With the Government of MoldovaSECRETARY CLINTON: Thank you very much, Daniel, for that introduction. And I know that this very first compact signing for you will have a special place in your heart. And I don’t want to increase the pressure on Moldova, but I think the chairman – or the CEO is going to be paying very close attention to how well we do together.
I want to recognize and thank the Prime Minister, the Deputy Prime Minister and Foreign Minister who have already been acknowledged, and also our Ambassador to the Republic of Moldova. Ambassador Chaudhry, thank you for being here and for your good work on behalf of our efforts in Moldova. I know that we have the North Carolina Secretary of State Elaine Marshall, who is here. Is Elaine here? Because – there you are, I was looking for you, Elaine – North Carolina has a strong partnership with the government and people of Moldova, and we’re delighted that you would come up for this occasion.
And all of you, thank you for being here for this historic event, the signing of the Millennium Challenge Corporation Compact. Since 2004, MCC has worked with countries all over the world to help millions escape the grip of poverty, to work with governments so that they had more capacity to deliver services to their people, to provide the kind of technical assistance that would go for the long term in the way that governments conducted their business – transparently, with accountability, free from corruption.
Through the MCC, the United States has provided over billion to national governments committed to good governance, economic trade and investments, and the health and well-being of their people. The country-led MCC framework empowers nations to chart their own paths to progress. Each country has to identify its barriers to progress, has to craft solutions to overcome these barriers, has to implement the programs that will move the countries toward economic growth.
In the last five years, over 40 MCC Compact countries have built schools, roads, hospitals, and made many other investments in infrastructure that are providing a solid foundation for future prosperity. And today, I am pleased that we are able to add Moldova to that growing list. This is the final step of a journey that began in 2005 when Moldova became part of the MCC Threshold Program. As a threshold country, it pledged to undertake a series of reforms before it could become eligible for an MCC compact.
And working with the MCC and our partners at USAID, the government implemented legal reforms to curb corruption, introduced budgetary requirements that promoted transparency, and strengthened the capacity of civil society and the media to report on crime. And in that period, Moldova made significant progress economically, socially, and politically. And we are very pleased that this day has come. We applaud the people of Moldova and their leaders for embracing a reform agenda.
We know it was not easy. We know that it came at political cost. But it was so important because it has established a democratic Moldova that has, for the first time, a democratically- elected prime minister in eight years. So this agreement begins a new chapter in the relationship between our two countries. It reflects our commitment to help put the people of Moldova on the road to economic progress, and that’s literally because, as Daniel pointed out, we’re going to be building roads with this money.
We will also be rehabilitating irrigation systems, helping farmers transition into high-value agriculture that has real market quality inside of Europe and beyond, and building those safe roads from Chisinau to the Ukrainian border so that farmers can get their goods to market. These are all essential steps, and we will work with you and support you as you proceed. The Obama Administration is committed to building our partnership, broadening it, strengthening it, and seeing the people of Moldova reap the benefits of market reform, political reform, and all of the efforts that have been undertaken in the last years.
So, Prime Minister Filat, today’s signing is a victory for governance, human rights, and economic reform. We want Moldova to be part of the Euro-Atlantic alliance with all of the benefits that that will bring to the Moldovan people. So I congratulate you, your government, and your people for your ongoing commitment, and I wish you every success in the implementation of this compact. And I thank all of you for being here for this important milestone.
Now, please join me in welcoming His Excellency Prime Minister Filat to the podium.
Moldova to improve its retail business regulationThe Government intends to introduce order in Moldova's internal trade, as it considers the existing highest prices in Europe on consumer goods in one of its poorest countries as a crime against the citizens.
Vice-Premier, Minister of Economy Valeriu Lazar said that the reason for high prices on consumer goods is a high cost of trade transactions.
"It is not normal, when the profitability in the trade constitutes 500%", the minister considers.
He expressed his dissatisfaction concerning the quality of products at the market.
"There are thousand and one controlling institutions in the country, but despite of this fact consumers have to buy low-quality products", Lazer said, who considers that the provision of the Moldovan citizens' decent life and consumer protection as the state's most important objective.
He said that in order to solve this task, the Government works out the Bill on Internal Trade, which is designed to remove the existing market problems. The document is worked out by a new department on trade policies, which was set up by the Ministry of Economy.
Lazer said that the Government will have to analyze the situation in the retail trade and services network of the Moldcoop Union of Consumer Cooperation. He expressed regret with the fact that the Moldcoop will not invest its financial resources in the development of its own infrastructure and it will not attract investors' financial resources.
Earlier Prime Minister Vlad Filat also said that the Government has many questions to Moldcoop, in particular, concerning the assets of these enterprises and the document, confirming the share of their participation and the state of objects.
The sale volume of consumer goods in Moldovan shops constituted 17.93 billion lei ($16.3 million) over 11 months of 2009, it dropped by 4.6% against the same period of 2008. The decrease is conditioned, mainly, by a 10% decrease in the sale of industrial goods. The trade in food products, which accounted for a little more than one third of the retail trade volume, increased by 5.1%.
Infotag, Moldovan news agency
The quality of the roads from Republic of Moldova, worse than in some African villages, according to a World Economic Forum ratingRepublic of Moldova is the last country in the world a far as the quality of the road is concerned. According to a rating realized by World Economic Forum, Republic of Moldova records a score of 16 points of 7, DECA-press Agency transmits.
At the category “road quality”, Republic of Moldova is the 124th, being followed only by Chad, an African state, where there are the worst roads of the world. Better roads than in Moldova are recorded in under-developed countries such as: Angola, Cameroon and Mauritania.
The global average indicator of the road quality in the world is 3,4 points.
The neighbours of Republic of Moldova also do not have god roads, according to the cited top. Ukraine is the 104th with a score of 2,2 of 7 points, and Romania has 2,1 of 7 points (the 111th).
In the Eastern Europe, the first place is occupied by Croatia in this context (the 37th in the world with 4,7 points). The most qualitative roads of Europe are recorded in France (the second place in the world). The first place belongs to Singapore. In the Easter Europe, the first place is occupied by Croatia (the 37th place in the world with 4,7 points). Of the former Soviet countries, the best roads are recorded in Latvia (the 62nd place with 3,4 points of 7). // DECA-Press
Property - Doing Business in MoldovaProperty
The property right is declared and guaranteed in the Republic of Moldova based on the Constitution and international acts the Republic of Moldova is a party to.
Property is public and private. It consists of intellectual and material assets. The public property right, as well as state bonds is guaranteed.
Nobody can be expropriated solely for the cause of public utility established under the law with fair preliminary compensation. Legally obtained property cannot be confiscated. The legal nature of the obtained property is presumed.
The right of private property inheritance is guaranteed.
The only restriction refers to the right of inheritance of agricultural lands or forest funds. Thus, foreign citizens or economic entities/foreign or mixed companies cannot own agricultural lands.
The legislation implicitly stipulates that the right to purchase and sell agricultural lands belongs to the state, individuals, citizens of the Republic of Moldova, as well as legal entities whose statutory fund does not contain foreign capital.
If foreign nationals or stateless persons become agricultural land or forest fund owners through legal or testimonial inheritance, they are entitled to alienate them through legal acts only between living citizens of the Republic of Moldova.
Nevertheless, there are a number of legal means, through which a foreign company or a foreign national can own agricultural lands.
