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Democracy and governing in Moldova

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No. 4, April 8, 2003

Activity of the public institutions

Foreign affairs

Studies, analysis, commentaries

I. Activity of the public institutions

1. Parliament

In the aforesaid period the Parliament examined the following legal acts:

Law on Local Public Administration, new wording.

The law was adopted in the final reading. It was stated that it complies with Council of Europe recommendations, especially with regard to financial autonomy, delimitation of responsibilities between the central and local power, as well as administrative control over local government.

Law on Pre-shipment Inspection

The final version of the law includes two provisions, previously viewed as being unacceptable by representatives of international monetary organizations. Under the law, two companies entitled to conduct pre-shipment inspection shall be selected based on a tender, whereas the list of goods due to be inspected shall be approved by the Parliament.

Law on modification and completion of the Law on Deputy Status.

Under the modifications approved, the provisions allowing for the deputy mandate to be lifted upon a court sentence or incompatibility were excluded.

Laws on the ratification of quadri-Agreement on the transit of nuclear wastes from Kozlodui nuclear power station

Before ratifying the Agreement, the Parliament operated a series of amendment to the laws related to environment and transportation, allowing for the transit of nuclear wastes from Bulgarian nuclear power station.

Law on ratification of Agreement on Ukraine adhesion to the CIS Economic Union

Although it took over the Presidency of CIS, so far Ukraine hasn't enjoyed the status of associated-member to CIS Economic Union. Under the Agreement Ukraine becomes a full-rights member of the CIS Economic Union.

Law on Pension Indemnification

The Parliament ruled that pensions (not exceeding three minimal salaries) should be indemnified yearly on April 1. In addition the Parliament decided that the minimal indemnification should not be less that 50 lei, whereas the minimal pension less than 135 lei.

Law on Establishing a Migration Department

The establishment of a Migration Department was provided for in the Law on Migration adopted by the Parliament last year. This has raised the number of Government Department's to 29, out of which 8 have been established since 2001.

Resolution on the results of control over Customs' compliance with the law

The resolution points to serious violations of the legal framework by Customs authorities and outlines a series of measures to be undertaken.

Law on the modification and completion of legal acts on the activity of the Center for Fighting Economic Crime and Corruption, adopted in the first reading

Among others the draft modifies and completes the prerogatives of the Center, which are currently provided for in numerous acts, such as Code of Penal Procedure, Penal Code, Fiscal Code, Customs Code, Law on Fighting Money Laundering, Law on the Court of Accounts, etc. contents previous next

2. Government

Cabinet reshuffle

On March 26, Government appointed Mr. Andrei Cuculescu to the position of Deputy Minister of Transportation and Communications, and Mr. Petru Grecu to the position of Senior Director of the National Agency for Telecommunication Regulation.

Deputy Minister of Justice, Victor Cretu, was designated ex officio as a permanent representative of the Government to the Constitutional Court. He will be in charge of keeping liaison between the two institutions, represent Government interests in the Court, coordinate the participation of central government officials to the Court sessions related to their field of activity.

In addition, Government appointed former Minister of Foreign Affairs, Nicolae Cernomaz, to the position of Republic of Moldova Ambassador to Ukraine.


On March 26, Government formed 10 commissions responsible for county liquidation and formation of rayons. Commissions will assess the inventory and patrimony of county councils and prefectures and will transfer them into the property of newly elected local public administration bodies.

On March 27 the Government approved the "List of loans and grants allocated to the Government of the Republic of Moldova" (see Official Monitor no. 60-61 (1153-1154), of April 1, 2003). Customs officials are obliged to ensure the import the goods necessary for the implementation of the said projects, without leveraging VAT and other customs fees.

Government approved the immigration quota for year 2003 allowing 2,114 persons to enter in the country. The quota represents 0.05% of the total population permanently residing in the Republic of Moldova.

Under the Plan of measures to increase the efficiency of local public administration, Ministries, Departments, local public administration institutions shall submit to the Government in the second trimester of the year regulations on their operation, functions and organizational structure. The Plan also provides for adjusting the Government structure to the Strategy on Social-Economic Development of the Republic of Moldova until 2005.

At the Government initiative a mechanism of annual pension indemnification was worked out. Indemnification coefficient shall represent the average between the inflation rate for the previous year and annual growth rate of wages per country. The minimal indemnification for 2003 shall be no less than 50 MDL, whereas minimal pension shall be 135 MDL. Pensions shall be indemnified commencing April 1, 2003.

During the April 2 session Government endorsed: National Social Program "Allocations and Credits for Housing" for 2003 - 2008; Concept of personnel professional training and outreach; Transitory Regulation on the functioning of Permanent Republican Commission on expertise, evaluation and sale of confiscated goods, etc. During the same session Prime Minister Tarlev requested Ministry of Economy to work out "a workplan for the social-economic development of each rayon". contents previous next

3. Presidency

President of the Republic of Moldova, Vladimir Voronin, convened on March 27 a session to follow on the situation in Transdnistria. The President commented on the recent decision of the Tiraspol Defense Council declaring state of war on Transdnistrian soil until April 1.

On April 1, Vladimir Voronin met with Mircea Geoana, Romanian Foreign Minister. Vladimir Voronin stated during the meeting that he hoped "obstacles related to the inappropriate use of terminology with regard to Moldovan state and elements of its establishment and consolidation" would be overpassed soon. Chief of the Romanian Diplomacy reiterated that Romania is willing to support Republic of Moldova efforts to integrate in the European Union as well as in the Stability Pact for South-Eastern Europe. Mircea Geoana pointed that European Union should offer Moldova more than what is provided for in the "Enlarged Europe" initiative. Romanian diplomat assured Moldovan counterparts that Romania had no intention to introduce visa regime for Moldovan citizens until 2007. In a related note, the parties agreed on the need to sign the Basic Treaty between the Republic of Moldova and Romania and on resuming the activity of Moldovan-Romanian Inter-ministerial Commissions.

President also met with Jaap de Hoop Scheffer, OSCE Chairman in Office and Netherlands Foreign Minister. The parties followed on the prospects of adopting the Protocol on final settlement of Transdnistrian conflict and on the membership of the future Mixed Commission, which is to draft a new Constitution. Mr. Jaap de Hoop Scheffer indicated that Supreme Soviet of the Transdnistrian region was ready to adopt such a Protocol. He assured President Voronin that as an OSCE Chairman in Office he was willing to provide his full support to secure the borders between Republic of Moldova and Ukraine. contents previous next

II. Foreign affairs

Stefan Odagiu, Deputy Prime Minister and Minister of Economy met with Dirk Verbeken and Joze Leandro, of European Commission, who are on official visit to the Republic of Moldova. Mr. Odagiu stated Moldovan authorities would like TACIS project to continue for another three years. Mr. Odagiu justified the request by the fact that European Integration was a priority for the Republic of Moldova. During their visit European Commission representatives negotiated with the governmental officials conditions of awarding a 15 million Euro grant.

Noteworthy, TACIS project, worth 2.5 million Euro was launched in April 2000 and was due to end on March 31, 2003, however it was extended until June. contents previous next

III. Studies, analysis, commentaries

1. Social orientation - no strategy yet
by Stefan Zgama

Since the beginning of 2003 two additional factors have drawn increased attention to social issues, which the Government has constantly declared as its priority. Firstly, elaboration of the Poverty Reduction Strategy (for which the country wishes to receive World Bank and IMF credits). Secondly, necessity of a "bigger care for people" on the eve of local elections. That is why, at least half of the 400 Government decisions adopted in January - March were on social issues.

In this respect, emphasis has been placed upon strengthening state regulation in the field of employment, wages and social security. Thus, beginning with April 2003, the pensions of 658,000 pensioners will be raised by 18%. The Government passed this decision given the increase of the minimal wage, which in its turn should secure higher revenues to the state social insurance fund.

In March, the National Employment Program for 2003 - 2005 was finally approved. The situation of the labor market in the country is quite worrisome. The decrease in the population number registered since mid 90' has been intensified in the recent years by the decreasing number of population able to work (ranging 18 - 62 years of age), in the IV quarter of 2002 they accounted for 1,579,000. According to statistics the latter reside mainly in rural areas, where 60% of the unemployed live. Resumed economic growth (in GDP terms!) had no impact so far on the employment: 1,688,000 in 1993 and 1,505,000 in 2002 (a 10.8% reduction). Under the methodology of the International Labor Organization, there were 110,000 unemployed and the unemployment rate was 6.8%. Youth, including those with higher education, accounts for the great majority of this figure. Half of those who went abroad in search for a job are younger than 30. The National Employment Plan provides that 70 "actions" would be organized to create new workplaces, to facilitate employment, to aid youth in finding jobs, to conduct professional training, to organize public works and to ensure social protection of the unemployed. The goal is to reduce the unemployment rate to 6.0 - 6.1% by 2005.

Government decided that the time has come to increase the monthly wage rate for the lowest (first) qualification rank workers in self-financing enterprises from 250 to 300 MDL. And since June 1 it will be raised for the second time - up to 340 MDL.

Gradual increase of the minimal wage sounds encouraging. However, a guideline, instead of inflation rate, should be rather considered adjustment of the minimal wage to the cost of living (in the IV quarter of 2002 - 521.7 MDL). So far, the ratio is 0.5:1.0. It is worth mentioning that the minimal wage of the public employee is currently 100 MDL, or 19.2% of the cost of living. Public employees' wage has been a constant headache for the Government. In 2002 monthly wage in education was 464.2 MDL, or 67.1% of the average salary per country, in health-care and social services 463.3 MDL or 63%. The Government recommended raising the wage in the budget-financed sphere by 15-20%, however trade unions believe it is not enough. The Government declared it would raise the wage despite the fact that its arrears in paying wages to the budgetary sphere exceed 170 million MDL (approximately 12 million USD).

Republic of Moldova is considered to be one of the poorest countries in Europe. So who are poor, where do they reside, and what stratum is the most affected by poverty? According to the "Report on Poverty" developed by the Poverty Monitoring Unit of the Ministry of Economy poverty rate has been estimated at 22.8%, based on the relative poverty line - 50% of the average household consumption, i.e. every forth Moldovan may consider himself to be relatively poor. This conclusion has been made based on examination of 6,400 household budget surveys (2002).

Poverty level is a little higher in the South of Moldova, where agriculture and small towns are predominant. In general, residence in rural areas is a factor increasing the risk of poverty (poverty rate is higher in villages than in cities). As for small towns, unemployment is stagnant there, many "old" factories are not working and there are no investments to create new work places.

It is interesting that in contrast to many countries, in Moldova the poverty is lower in households lead by women than in those lead by men. At the same time it was pointed out that the younger the women are, the lower is the risk for the household to become poor.

In general, the young age of the household head, which is considered to be a risk factor in other countries, is not valid for Moldova. Moreover, the poverty among the households lead by young people, up to 30 years of age, is lower as compared to other families and represents 72.1% of the average level. The reason for this is the fact that traditionally young families benefit of material support from their parents and relatives, which enables them to enjoy better living standards especially until they have children.

The Government should pay attention to the fact that poverty in families increases with the number of children. The poverty rate in families with three children is 1.4 times higher than in families with one child, whereas in families with four or more children 2.1 times higher. Children up to five are in a particularly difficult situation. An extremely worrying fact is malnutrition in families with many children. Another risk category consists of retired people. Level of their poverty increases along with their age advancement.

Education - a good legacy of socialism - reduces the risk of poverty. People with higher education are 2.3 times less subject to poverty risk than the rest. Unfortunately, education has become lately a privilege of well-off families. Average per capita spending on education in poor families is 10.5 times less (!) than in prosperous ones. This is also valid for health-care: in poor families those expenses are 9.7 times less than in well-off families.

As we can see, poverty is many-sided in Moldova. But the country both lacked strategy on poverty reduction in the past and still lacks it. It has been two years now since various committees and projects are working, seminars and meetings are held. Nevertheless, there still is no integral vision of the problem and ways of its solution, which IMF/World Bank missions have noted with regret and left Moldova without seeing any Poverty Reduction Strategy that the Government promised to deliver by March 31. contents previous

2. The territorial-administrative reform of the Republic of Moldova
by Igor Botan

On 21 March the new Law on the Territorial-Administrative Organisation of the Republic of Moldova entered into force. To justify the proposed revision of the local public administration system, the Moldovan authorities have put forward two major arguments: the electoral promises made during the February 2001 parliamentary elections, and the need to cut out on administrative staff, and hence the expenditure incurred by local administration.

In essence, the reform consists in replacing the 10 existing counties (judete) with 33 districts (raioane). The idea to reform the territorial-administrative organisation of Moldova and its local public administration has enjoyed the support of the majority of Moldovan deputies, the government and the president. In his speech to the deputies at the end of the autumn-winter parliamentary session in 2001, President Vladimir Voronin showed his full backing of the reform, which, among other things, was intended to limit the abuses by local public officers. More recently, on 2 April 2003, in an answer to questions by the readers of the "Komsomol'skaya Pravda" newspaper, President Voronin reiterated that many citizens are not happy with the poor activity of the local public administration bodies. This, according to him, is yet another justification for the proposed territorial-administrative reform. He further stated that "four years ago when the judete were established, what happened was a de facto distancing by the government from the daily problems of ordinary people. Now the power has to go back to the former districts, deserted in the meantime, the small towns being the most affected and at present they such basic infrastructure as water and gas supply and basic sewerage".

The law that has recently entered into force was adopted as long ago as 27 December 2001. In the meantime, the parliamentary and extra-parliamentary opposition repeatedly contested the reform of the local public administration system. The opponents of the governing party tried to show that the arguments of the government were unfounded. They said there was no reason to assume that decreasing almost by three times the size of the territorial-administrative entities would help eliminate abuses by local officers. It is unclear why abuses by public officers, once committed, should be fought through territorial re-organisation, and not by legal ways. Likewise, it is not clear why the development of small towns and the services run in them should depend on two types of administration being located within them - the town and district ones.

The assumption that increasing the number of administrative units by reducing their size would contribute to the reduction of administrative staff seems just as unfounded. Firstly, even if the size of administrative units is reduced, the volume of duties and tasks will practically stay the same. Secondly, it is well known that the government has promised to reduce the number of officers at central level, but, paradoxically, this number keeps inflating, as does the number of ministries and departments. President Voronin himself had to draw the attention of the cabinet to this dangerous phenomenon. Why is it then believed that at the local level the opposite effect would occur?

The arguments of the government such as their concerns for the citizens who have to travel long distances to the current county centres are fiercely contested by its opponents. The latter ones believe that the authorities would do better using the funds foreseen for the come-back to the old administrative structure to train local officers so that these could provide services to their citizens on the spot.

Generally, the opponents of the reform believe that there are actually two major goals that have determined the current government to initiate it. The first is to submit the local public administrations to the control of central authorities, and prevent them from turning into relatively self-sufficient entities in financial and economic terms. According to them, this move is part of the scenario of "building the vertical element of power", launched by the current government in early 2001. The second goal is to bring the territorial-administrative organisation in line with the structure of the territorial branches of the ruling party, which, organisationally, are based on the territorial division of the country as it was before the 1999 reform. The return to the old system would allow party officers to be promoted to public administration structures. Although this latter assumption seems unlikely, it is not totally lacking in point if one remembers a plenary session of the ruling party held soon after the 2001 elections when some leaders of field branches said they were not happy with the staff policy promoted by the party elite. Therefore, it is not excluded that the intended reform is one way of rewarding the efforts of field party activists.

However, some experts believe that the government might have to face certain unexpected side effects of the reform. At the beginning of the electoral campaign for local elections, already politically tense, a number of economic and financial problems have surfaced. The estimated cost of the reform, as presented by the author of the relevant law, the deputy Prime Minister Vasile Iovv, is almost 10 times less that the one estimated by mayor associations experts.

In any case, the reform of the system of public administration will require substantial resources. Notably, in an earlier statement, the deputy Prime Minister Vasile Iovv said he was not able to understand how cabinet members could develop new social programmes without having identified funds for their implementation first. However, none of the cabinet members dared ask the deputy prime minister how come he masterminded the public administration reform without the necessary funds being provided for in the state budget. All the more so as the issue of funds needed to carry out the reform seems to have already played a role in the worsening of Moldova's relations with the World Bank and the International Monetary Fund. This issue is ever more important given that the execution of the 2003 budget is highly improbable, and that as long as relations with the two financial organisations do not improve, Moldova risks missing the 15 million dollar worth of grants for the alleviation of its budget deficit.

Independent experts believe that the government's argument that the territorial-administrative reform is about fulfilling their electoral promise, is not a satisfactory justification of the reform, even though the president, parliament and government launched in 2001 a campaign of collecting signatures in its support. As for the citizens' view on the reform, the opinion poll conducted by the Institute of Public Policies in November 2001 showed that the reform of the public administration is not one of the priorities of ordinary citizens. Instead, citizens indicated economic, social as well as security issues being of major concern to them.

Another point is that the rulers show strangely principled to fulfil their electoral promises only in selected fields, which they expect to render political gains, especially through tightening controls over the entire administrative apparatus at local level. For example, in the 2001 campaign, the ruling party has promised to review the effects of privatisation and even stop the process. Surprisingly, later on they planned in the 2002 budget returns from privatisation estimated at a record amount of 700 million MDL. Moreover, it is curious to note that in 1990, when the Soviet Union still existed, the Communist Party of Moldova, whose successor the current ruling party claims to be, initiated back then the reform of the territorial-administrative organisation to increase the efficiency of the administrative and economic lives in the republic. Three alternative proposals for the reform were considered: re-dividing the country into seven administrative units, nine units or 12 units. One can therefore state that the government's current initiative to re-organise the country from 12 to 33 entities somehow undermines the principle of consequence.

The Moldovan Parliament of the XII legislature took over the initiative in 1990, and drafted the laws necessary to put into practice the international standards in local public administration, but the process was frozen for a long period of time. In 1995 Moldova joined the Council of Europe, and one of the conditions for joining was the modernisation of the system of local public administration according to Council of Europe's standards.

The 1999 reforms of local public administration and territorial administration were carried out based on laws adopted in 1998 and a number of clear cut principles: territories capable to ensure relative economic self-sufficiency, financial autonomy, decentralisation of services. The key idea of the 1999 reforms was the development of 10-12 urban centres, where financial resources and economic potential were to be concentrated. The reforms could have contributed to the cultural and scientific development of those centres. Opposition members have admitted that serious errors were committed while implementing the 1999 reforms, which should be corrected, but in ways other than their complete abolishment.

It is believed that decreasing the size of administrative units would make them more economically dependent on the central administration. This will make it difficult for the principle of financial autonomy to be respected. Thus, the prospect of developing the regions emerges grim. One can hardly imagine 33 towns - administrative centres being developed in Moldova. For example, in relation to the cultural life, apart from the capital Chisinau, there are theatre halls only in two other towns, Balti and Cahul.

For these reasons it seems obvious that in a country as poor as Moldova the few resources that are available should be channelled towards a certain number of centres and in an edifying effort rather than one of uniform counter-productive dispersion.

The reform of the local public administration looks even more misplaced given the proposed federalisation of Moldova. At the moment, one does not even know the number of subjects that the proposed federation is going to have. The question that begs itself is what could possibly be the point of reforming the territorial organisation of Moldova under the current circumstances.


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