Moldova: Russia's Next Target? | STRATFOR

Moldova: Russia's Next Target? | STRATFOR

Moldova: Russia's Next Target?
August 9, 2010 | 2151 GMT
Moldova: Russia's Next Target?
VLADIMIR RODIONOV/AFP/Getty Images
Russian President Dmitri Medvedev (L) and acting Moldovan President Mihai Ghimpu in Chisinau on Oct. 9, 2009
Summary

The head of one of the parties in Moldova’s pro-European ruling coalition said Aug. 9 that the coalition “de facto no longer exists.” This is just the latest in a series of events indicating rifts within the ruling Moldovan coalition — rifts that Russia could use as a way to increase its influence in Chisinau.
Analysis

The leader of the Democratic Party — one of four parties in Moldova’s ruling Alliance for European Integration (AEI) — said Aug. 9 that the ruling coalition “de facto no longer exists.” Democratic Party chief Marian Lupu said that although the coalition officially has held together, he was “ashamed” to belong to the same coalition as Moldovan Prime Minister Vlad Filat and acting President Mihai Ghimpu, and that he would stand as a candidate in the country’s upcoming presidential elections.

Lupu’s statements are only the latest sign of rifts within Moldova’s ruling coalition of pro-European parties. Russia sees these rifts as an opportunity to assess just how much effort — as well as risk — it is willing to take in increasing its influence in Chisinau at the pro-European elements’ expense.

According to STRATFOR sources in Moscow, Moldova could be the next former Soviet country where Russia will target pro-European political elements. This follows a key development in May, when Russian President Dmitri Medvedev and his newly elected pro-Russian counterpart in Ukraine, Viktor Yanukovich, issued a joint declaration that their countries would work together to address the ongoing dispute over the breakaway province of Transdniestria. There are two ways that Russia — with Ukraine’s help — could address the Moldovan issue in the short term. One is to attempt to bring Transdniestria under control along with the rest of Moldova, and the other is to maintain hegemony over just Transdniestria and settle for a split country, without controlling Moldova proper.
Moldova: Russia's Next Target?

Circumstances in Moldova could make the country vulnerable to Russia’s designs. The government is weak and split among the AEI member parties and faces constant challenges from the pro-Russian Communists, who are now in the opposition. The pro-European Ghimpu has made some extremely controversial moves like issuing a decree to mark June 28 as “Soviet Occupation Day” (which has since been overturned by the country’s Constitutional Court). This not only angered Transdniestria and caused Russia to retaliate by targeting the country’s wine exports, but polarized the pragmatic pro-European elements within Moldova as well, as evidenced by Lupu’s recent statements. This has caused the pro-European bloc’s popularity to fall and the Communists to make a comeback in the polls, and sets the stage for a referendum scheduled for September that could see a new set of general elections, likely in November. The Communists could then retake power from the fragile AEI.

Russia is not the only outside power vying for influence in Moldova; another more traditional suitor is Romania, which has cultural and ethnic ties to the country. Romania, seeing the course of recent events in Ukraine, has been pursuing Moldova aggressively, thinking it could be the next former Soviet state to fall to Moscow. Romanian President Traian Basescu recently stated that the two Romanian-speaking territories should be reunited, and that, should Ukraine make a move for Transdniestria or Moldova, Romania would use the Romanian populations in western Ukraine — mainly Bucovina — to challenge Kiev. Ukraine and Russia have taken Basescu’s comments quite seriously. Basescu’s comments were also controversial within Moldova, where many citizens are against being split between Ukraine and Romania and instead want Moldova to remain its own independent country.

The Transdniestria issue is also a key topic that Germany specifically suggested Berlin and Moscow work on as they seek to strengthen their ties via the Russia-EU Security Council. German Chancellor Angela Merkel said Transdniestria should be a priority for Russian-EU talks, and the issue was at the top of the agenda for Merkel’s meeting with Medvedev in June. Germany drafted a proposal for negotiations on the issue, but this included Russia removing its troops from Transdniestria — something Moscow has said it would not do. As Russia and Germany increase cooperation in the economic and energy sectors, the Transdniestria issue could slow this warming of relations. Russia expanding its influence in Ukraine is one thing, but Moldova may be a little too far into Europe for even Russia-friendly Germany to be comfortable with. Russia’s overtures in Moldova therefore could ripple across the rest of Europe, depending on how far Moscow decides to go to increase its influence in Chisinau.

INTEGRATED AGENCY ON FOOD SAFETY IS TO BE CREATED IN MOLDOVA.

Infomarket.md - Public Goverment

27.07.2010

This was announced by Minister of Agriculture and Food Industry Valeriu Cosarciuc speaking at the meeting of governmental commission for European integration held by Prime Minister Vladimir Filat. The head of the Ministry of Agriculture noted that the system of food safety will appear in Moldova together with creation of such agency. In his turn, Deputy Prime Minister, Minister of Economy Valeriu Lazar informed the commission on preparation for negotiations between Moldova and EU on the creation of a deep and comprehensive free trade area with EU within the Association Agreement. According to him, the negotiations on this document and its signing will make it possible to create favorable business environment for Moldavian companies and foreign investors. According to information, provided by Deputy Minister of Transport and Road Infrastructure Boris Gherasim, the State Administration of Civil Aviation of Moldova is ready to participate in consultations with European commission experts on liberalization of air services and in negotiations for joining of Moldova to the Single European Airspace. Vladimir Filat appealed to the members of governmental Commission for European integration to show maximum responsibility in implementation of measures, relating to integration of Moldova to the Single European Space. // 27.07.2010 - InfoMarket.

Creation of Moldova Business People Association

Moldova's news - Creation of Moldova Business People Association

On July 26th, 2010, the Moldova Business People Association was registered by a group of successful businessmen operating in the following fields: telecommunications, banking, media, advertising, commerce and others, who recognized the need to consolidate their efforts in order to contribute to settling the economic problems of the Moldovan society.

The main purpose of the Association is to create a transparent business climate, based on the fundamental principles of market economy, aimed at achieving sustainable and effective development of the national economy. This objective will be attained by promoting legislative initiatives, promoting the image of the country, attracting foreign investments in Moldova and developing the local business community.

The Association will present its action plan at an official event which will be held in the nearest future.

For more information, please contact the Executive Director of the Moldova Business People Association:

Mr. Roman Chirca
Tel: +373 60 066 220
Tel/fax: +373 22 809 913
roman.chirca@pro-sper.md

INTERVIEW: Moldova replaces Ukraine as darling of donors

INTERVIEW: Moldova replaces Ukraine as darling of donors - BUSINESS NEW EUROPE

Graham Stack in Chisinau
April 22, 2010


A year ago, Moldova suffered Kyrgyzstan-style public disorder following contested elections, which ended with a new pro-EU government pushing a reform agenda taking power. Lenders and investors took note, and on March 24 the Moldova Partnership Forum brought together sponsors and investors at a major donor conference in Brussels.

"The Moldova Partnership Forum held in Brussels was about two important things: trust and commitment," Melanie Marlett, World Bank country head for Moldova, tells bne. "Trust from the international community in the government's reform programme and commitment to supporting Moldova's development and modernization agenda."

As well as a total of $2.6bn pledged by institutions for critical investments in roads, access to water and sanitation, agriculture, energy, health, regional development and social protection, the March conference was also about positioning Moldova as the entirely unexpected star pupil from among the EU's "Eastern Partnership" pupils, says Marlett. The small country often cursorily referred to as "Europe's poorest country" has leapfrogged established reform favourites such as Ukraine. "Moldova's commitment to European integration and its willingness to embrace change and implement even tough reforms has put Moldova on the map in Brussels in a very positive way," Marlett enthuses.

This optimism is all the remarkable given that the crisis hit Moldova late but very hard. "Moldova's economy has been severely weakened by the global crisis," Marlett acknowledges. From 2000-2008, growth averaged 6%, led by consumption financed from remittances from Moldovan migrants. The crisis exposed the vulnerability of this growth path, with remittances falling by 29% in 2009, GDP by 6.5% and household consumption by around 12%.

But the new reformist Alliance for European Integration, taking office after nine years of Communist Party rule, quickly developed an Economic Stabilization and Recovery programme focusing on putting the country's finances in order, liberalizing markets and improving the business environment, and thus successfully garnered international financial support when in January the International Monetary Fund (IMF) agreed to lend it $574m.

Singapore on the Dniester

But this won't be sufficient on its own. "The global economic crisis has exposed the vulnerability of a remittance-based growth model. Moldova needs to start thinking about its future growth model. What are the potential sources of growth for Moldova?" asks Marlett. Here, World Bank thinking takes on board not only European, but also Asian, specifically Singapore's, experience with information and communication technologies (ICT).

IT currently constitutes 10% of Moldovan GDP, with 25,000 employed in the sector, according to statistics provided at an USAID Information and Communication Technology Summit in Chisinau on March 30. "The experience of countries like Singapore transforming the way government does business through the use of ICT is an example of how modern technology can reduce public spending, eliminate the human factor and thus minimize the risk of corruption, and deliver a better, faster and cheaper service to citizens and businesses," argues Marlett. The World Bank has consequently helped launch an ICT partnership between the two states, with Moldova signing an agreement with Singapore to draw on its experience.

A major obstacle, though, is that Moldova still has a criminally low broadband internet penetration of around 6% - not surprising considering a majority of the population is rural. "The government recently approved a decision to liberalize international broadband Internet connectivity. This will increase competition on the domestic market and lower internet costs for the end user."

In addition to the use of broadband, the World Bank is also exploring the use of mobile services - eg. m-banking, m-health, m-agriculture - as a way to reach an even wider audience, as penetration of mobile telephone use in Moldova is 70%.

These ideas have been incorporated into the government's own reform programme called "Rethink Moldova" that was endorsed at the donor conference. Among the more specific measures proposed is the restructuring and even privatization of national telecommunications provider Moldtelecom and the building of technology parks. A study by EU technical experts identified five potential locations for industrial parks, requiring estimated investment of €73m. The government is also planning investment in optical fibre infrastructure and an on‐ground digital television network.

The global media labeled last year's Chisinau protests as the "Twitter Revolution," but it was more a case of Twitter putting Moldova on the map than vice versa: protest leader Natalia Morar later acknowledged that she had only opened a Twitter account the day after the protests occurred, with "traditional" Russian social networks such as Vkontakte.ru and Odnoklassniki.ru playing the key role. But this is still a strong indication of connectedness among the younger generation, and of the potential for social change of ICT that Moldova appears to be placing much of its hopes upon.

Chisinau's charm offensive

Poor Moldova: Chisinau's charm offensive | The Economist

Europe’s poorest country looks for friends in the West

Mar 31st 2010 | From The Economist print edition

FEW people have heard of Moldova—and when they have, it is usually for the wrong reasons. A frozen conflict with Russian-backed separatists in Transdniestria has hamstrung the country since 1992. A year ago a rigged election brought riots, followed by hundreds of arrests, scores of alleged beatings and rapes, and three deaths. The outrage led to a new election and the formation of a shaky pro-Western coalition government. Its youthful ministers are in sharp contrast to the greyness of the previous regime, nominally a Communist one but in fact crony-capitalist.

The new lot have thawed relations with Romania and launched a charm offensive in the West. A donor conference recently pledged €1.9 billion ($2.6 billion), half in grants and the rest in soft loans. China has dangled a $1 billion loan for infrastructure. The IMF has approved the government’s economic policies: after an 8.5% drop in 2009, GDP is likely to grow by 1.5% this year. Yet Moldova will still be Europe’s poorest country. Hundreds of thousands of Moldovans work abroad, mostly illegally. Their remittances keep Moldova afloat.

Outsiders see more changes at the top than Moldovans themselves feel in practice. Reining in the budget deficit, over 8% of GDP in 2009, will mean rises in heating costs and cuts in a bloated public sector. Wrangles in the deadlocked parliament over the election of a new president waste time. Failure, says the constitution, would mean another general election that few want.

More important to voters is travel to the rest of Europe. This has got harder since Romania joined the European Union in 2007. The Romanians promise a special regime for Moldovans living within 30km (about 19 miles) of the border. But they also want to join the Schengen passport-free zone next year, which would create still more expense and hassle for Moldovans. The goal of visa-free travel to the EU is a long way off.

Changing Western minds means enacting reforms, not just talking about them. Officials speak excitedly of Estonia and Georgia as models. One sign of intent might be to liberalise aviation rules, allowing budget airlines to fly to Chisinau. That would be popular with passengers but bad news for the protected national airline, Air Moldova.

The biggest change has been in media freedom, tightly restricted under the previous government. Two new television stations have started broadcasting. Romanian television will return soon. But big reforms in the corrupt, Soviet-style bureaucracy must wait, as it seems must the rule of law. Investigations into official misbehaviour during last year’s riots have brought some sackings and suspensions, but no deep-seated changes—or even a truthful account of what really happened.

MOLDOVA: Wine-makers hope to preserve county's wine industry despite deep economic crisis

MOLDOVA: Wine-makers hope to preserve county's wine industry despite deep economic crisis

The Moldovan wine-making industry dates back to the country's ancient Greek and Roman colonisers.
The grape-growing and winemaking in the area has had periods of growth and decline but has survived through all the changing social and economic conditions of Europe's poorest country. The times of decline, such as those under 300 years of Ottoman rule and during two World Wars, have been followed by good times such as the beginning of the 19th century and during the Soviet years in the 1950's.
The recent years have been turbulent for Moldova's wine-makers. The industry is reeling from three successive blows - a 2006 Russian embargo on Moldovan imports, now lifted, the fall of the US dollar and now the world financial crisis.
"The wine-producing industry we had before - I think it is already dead. I cannot speak for everyone, but I think it is probably dead. We are not competitive. We cannot keep our heads above water at the moment. We all have loans to pay off and we cannot make a return on the money we've invested," said Nelly Sonic, vice-president of the "Lion-Gri" winery, one of the country's top three producers.
Like many businesses in Moldova, a crescent of land wedged between Ukraine and Romania, ''Lion-Gri'' has become saddled with debts as it tries to keep alive a business with costly inputs - labour to tend the vines and oversee production, herbicides and a bottling plant.
But despite all the problems, Nelly Sonic still thinks there is a future as a Moldovan wine-maker.
"We do not want to stop producing wine. Moldova is a country of wine producers. However difficult it may be, we will work until the end to remain a wine-producing country," Sonic said.
The Moldovan wine industry has never recovered from the blow it was dealt in 2006 when a diplomatic conflict with Russia resulted in a ban on Moldovan wine imports.
If prior to the ban Moldova sold to Russia 180 million euros worth of wine per year, today the amount is less than 57 million euros. Sales to Europe and other countries cannot make up for this loss. Moldovan wines are not very well-known in the West and face tough competition from established local producers.
"Our wine producers, for the most part, are of the old Soviet type, making not very high quality wines," said Veaceslav Ionitsa, programme director of the economic policy centre at the Institute for Development and Social initiatives.
"They have been oriented towards the Russian market and totally unable to enter other markets. At the moment I would say that our wine-making industry is in a coma. Out of 160 wine factories only 20 sell their products in the west and are built with the participation of western money. And they are doing fine now, as they did before the crisis. But most of the wine-makers are in a very bad situation and they are pulling down other industries like grape producers and bottle producers with them," he added.
Like other ex-Soviet republics, Moldova is reeling from the financial crisis, with the added difficulty that remittances from hundreds of thousands of its nationals working abroad - critical to the 4.3 billion euro economy - are down by a third. Political instability has further complicated the mix.
But despite all the problems, local wine-makers hope that this period of decline will end and Moldova, with its warm, sunny climate and rich wine-making traditions, will produce wine which will find its way into the world's markets and contribute to the country's future prosperity.

United Kingdom upbeat on Moldova's future in EU

Agentia Informationala de Stat "Moldpres"

Chisinau, 2 March /MOLDPRES/ - The United Kingdom will be a friend of Moldova within the European Union. This message was conveyed to the Moldovan authorities by a representative of the British Foreign and Commonwealth Office, head of the Diplomatic Service Peter Rickets at a meeting with Deputy Prime Minister, Foreign and European Integration Minister Iurie Leanca. The Moldovan official was on a visit to London on 26 February - 1 March, the Foreign and European Integration Ministry's (MAIEIE) media and public relations directorate has said.

This support stems from the United Kingdom's consistent position in favour of the extension process and has been recently proved through full support provided within the EU for the launch of talks on a Moldova-EU association agreement.

The discussions at the British Foreign Office confirmed the British government's willingness to give the necessary assistance, especially methodological examination and advice in the most important for Moldova sectors, such as economy and finance, security and defence, justice and domestic affairs. In particular, the United Kingdom showed willingness to consider a possibility of assisting the training of Moldovan experts for negotiations on the future agreement on deep and comprehensive free trade.

The British government reiterated its support for the structural reforms launched by the Moldovan government, including through its participation in the international effort of giving financial assistance. The government also welcomed the initiative to organize a conference of donors in Brussels on 24 March 2010.

During meetings held on the occasion of the visit to London by the Moldovan official, representatives of the British parliament discussed the importance to consistently and coherently promote domestic reforms, which represent a solid basis for the advancement of dialogue with the European Union. Encouraging messages were launched within a meeting with the head of the parliamentary commission for EU, Lord Roper. The British MP said that Moldova's future is in the EU, and on this ground, Moldova should be treated differently from other participants in the Eastern Partnership, on the basis of the progress made on the path of reforms. The Moldovan foreign minister stressed the importance that the EU creatively approach Moldova's performance, especially while developing the Moldova-EU dialogue on the liberalization of the visa regime in the long run.

Iurie Leanca thanked the parliamentary friendship group for Moldova led by Lord Dubs for its substantial contribution to maintaining Moldova on the agenda of the British parliament and government. In this respect, he referred to the parliamentary motion "Moldova's Future", launched following an initiative by the members of this group.

The issue of facilitating the visa regime between Moldova and the United Kingdom was the main subject discussed with British Minister of State for Borders and Immigration Plil Woolas. The issue was approached in the context that cooperation in this sector represents a Moldovan-British bilateral exercise, as the United Kingdom is not party to the Schengen Agreement. The two officials shared the opinion that possibilities of giving up the compulsoriness of visas for the holders of Moldovan diplomatic passports should be considered.

On visit to London, Minister Iurie Leanca met representatives of the Moldovan community in the United Kingdom, in the context of a wider governmental strategy to establish a direct dialogue between the central authorities and the compatriots from abroad. Leanca presented the government's objectives and the actions undertaken to support the Moldovan communities from abroad. The sides discussed the social and education problems faced by Moldovan citizens. Representatives of the diaspora asked the Moldovan central authorities to consolidate the communication strategies with the Moldovan nationals from the United Kingdom, and especially Ireland, where it is highly necessary to enhance the interaction between the authorities and the diaspora, given the lack of a permanent diplomatic representation, including by appointing an honorary consul of Moldova in Ireland as soon as possible. The minister gave assurances that the proposals would be examined attentively, adding that the national authorities would undertake the necessary measures to fulfill them.

Discussions with representatives of the National School of Government focused on prospects of cooperation to consolidate the institutional abilities of the central public administration.

The Moldovan foreign minister made a presentation at the Royal Institute of International Affairs on the subject "Moldova's Integration into Europe and Black Sea Region" and gave interviews to British journalists.