No. 5, 22 April 2003
Activity of public institutions
Studies, analyses, comments
I. Activity of public institutions
During the past two weeks the parliament adopted the following key legislative acts:
Protocol on the mechanism of drafting and adopting the Constitution of the Federal State
The Protocol provides for the method of setting up the Committee, which is to draft the new Constitution of the federal state, the schedule of drafting it and subjecting it to public debates, as well as the method of adoption it i.e. through referendum.
Question arise, through, with regard to the established procedures since the few articles of the Protocol do not cover the entire range of issues that might arise as the two parties work together. What is certain is the fact that the processes of drafting and adopting the new Constitution falls out of the current regulations and in many ways does not fit into the existing constitutional norms.
Law on the Ratification of the Convention between the Republic of Moldova and the Republic of Albania on Avoiding Double Levy and Preventing Fiscal Evasion Regarding the Income and Capital Taxes
The ratification of this Convention sought to avoid double levy, prevent fiscal evasion, distribute the rights of fiscal levy between the contracting parties, abolish fiscal discrimination of all form, etc.
The Convention is founded on the following principles: non-discriminatory treatment of taxpayers, establishment of taxes, simple return management and speeded-up entrepreneurship.
Law on the Ratification of the Protocol to the Convention on Judicial Assistance on Civil, Family and Criminal Matters among the CIS States
The law guarantees assistance in the event of undertaking judicial proceedings, including developing and sending documents, investigations, searches, collecting material evidence, expertise, interrogations, hunting operations, extradition and execution of sentences.
Decision on the Application of the Convention on Banning Development, Production, Storing and Use of Chemical Weapons
The decision establishes the Ministry of Economy the national authority responsible for the application of the provisions of the Convention. The Ministry of Economy is accordingly empowered to exercise all ensuing functions and to represent the Republic of Moldova in relations with the Organisation for the Prohibition of Chemical Weapons.
Law on the Amendment of the Code on Administrative Offences
The law adds to the Code a number of provisions on sanctions to be applied where the rules of using cashier and control machines are breached.
Law on Completing the Law on Police
The amendments give police bodies official green light to use technical metrological equipment to determine the velocity of vehicles. This equipment has been used to date, although no legal provision to that effect has been in force.
Law on Completing the Law on State Budget and Exemption from Customs Duties on Imported Wine Distillates
The law allows the Customs Department to extend with a maximum four months the deadline for paying excises and other duties on imported wine distillates used for the production of alcoholic drinks.
On 16 April 2003, the Director of the Department of Privatisation, Nicolae Gumenii, was dismissed upon his request. Mihai Cibotaru, the Deputy Director of this department, will be Director in office. In the same way was dismissed Petru Coslet, the Deputy Director of the Department for Emergency Situations.
Mihai Laur, Moldova's Ambassador to Hungary, will cumulate the functions of Moldovan Ambassador to the Holy See, and will be based in Budapest. Mihai Popov, the Moldovan Ambasador to Belgium, will cumulate the functions of Moldova's Ambassador to the Netherlands, based in Brussels, and Vladimir Turcan, Moldova's Ambassadro to the Russian Federation, will also be Ambassador to Turkmenistan and will be based in Moscow.
The Government of the Republic of Moldova adopted its plan of activity for the 2nd quarter of 2003. According to the plan, 41 legislative bills are to be reviewed, including the draft law on the amendment and completion of law on fighting money laundering of 15 November 2001, the draft law on the prevention and fight of corruption, the draft law on the approval of the report on the execution of the 2002 state budget, the draft analytical report on the execution of provisions of the Partnership and Co-operation Agreement between the Republic of Moldova and the European Union (EU) during five years of its entry into force, the draft analytical report on the activity of national economy and the execution of budget in the first quarter of 2003 etc. The plan also provides the preparation of the meeting of the Moldova-EU Co-operation Council, monitoring of the execution of the Government decision to approve the Strategy of Export and Moldova Exports and Imports Promotion in 2002-2005.
On 3 April 2003, Government adopted the draft law on the ratification of the Free Trade Agreement between the Government of the Republic of Moldova and the Council of Ministers of Bosnia and Herzegovina.
On 4 April 2003, Government approved the National Strategy "Education for All", based on which the Ministry of Education needs to develop and propose within the next three months the National Plan of Action. The Strategy includes the evolution of the legislative framework in the field of education, identifies the priority tasks, principles and directions to be pursued while implementing, monitoring and evaluation the strategy.
The national social programme "Allocations and Credits for Houses" for 2003-2008 was approved by the Government on 8 April 2003. The Programme is intended to enhance the social assistance of the population paying for communal services and improve the financial-economic mechanisms, which help create the house market.
On 14 April 2003, a Governmental Panel for the development of the energy complex of the Republic of Moldova was set up. The Panel will draft and co-ordinate the implementation of a project aimed to develop this complex.
On 16 April 2003, the Government approved a draft law whereby the value of pensions for all categories of employees will be set in accordance with the length of employment and the amount of taxes paid into the state budget of social insurance.
President Vladimir Voronin met on 14 April 2003 with Stephen Michael Minikes, US Ambassador to the OSCE. The two discussed the Transdnistrian conflict resolution process. The American diplomat reiterated the US and OSCE interest in solving the conflict and assured President Voronin of their readiness to offer assistance. Stephen M. Minikes stressed that there are no differences between the US, EU and the OSCE as to the ways of solving the Transdnistrian skirmish.
On 15 April 2003, Vladimir Voronin received Vadim Gustov, Chairperson of the Committee on CIS of Russia's Federation Council. President Voronin restated the interest of the Moldovan side in identifying the ways to restructure Moldova's historical gas debt to the Russian Gazprom. President Voronin also mentioned the need to review the price policy with regard to the gas imported by Moldova from the Russian Federation. In order to increase the commercial exchanges between the two countries, the Moldovan side showed interest in setting up Moldovan trade centres in Russian regions.
II. Foreign affairs
On 9 April 2003, the heads of states and governments of the Member States of the South East European Co-operation Process (SEECP) met in Belgrade. The SEECP members are Albania, Bosnia and Herzegovina, Bulgaria, Greece, the "former Yugoslav Republic of Macedonia", Turkey, Serbia and Montenegro. Croatia enjoys observer status. A Moldovan delegation led by President Voronin attended the meeting.
In its speech to the meeting, President Voronin expressed hope that at the next SEECP meeting in Sarajevo, Moldova will participate as a full-fledged member and will thus be able to fully contribute to this regional initiative.
President Voronin met Romano Prodi, President of the European Commission, whom he informed of the Transdnistrian conflict resolution process calling for EU more active involvement in the process of setting up Moldovan-Ukrainian shared customs posts.
In addition, President Voronin had bilateral meetings with the President of Bosnia and Herzegovina Mirco Sarovic, with whom he signed the Agreement on Mutual Encouragement of Investments, the President of Bulgaria Gheorghi Pirvanov; the President of the "former Yugoslav Republic of Macedonia" Boris Trajkovski and the President of Croatia Stjepan Mesic. During these meetings the possibilities of intensifying the political and economic ties between parties was considered.
Bulgaria proposed to set up the SEECP in 1997.
Vladimir Voronin attended the European Conference in Athens on 16-17 April 2003. At the conference, the 10 EU accession states signed the EU Accession Treaty. President Voronin congratulated his European colleagues with the enlargement of the EU, reiterated the importance of Moldova's integration into the EU and requested for Moldova a similar status with the one granted to the South East European states. During the conference, President Voronin met with Javier Solana, Secretary General of the EU Council and High Representative for the Common Foreign and Security Policy. The two officials talked about the Transdnistrian conflict resolution efforts and Javier Solana promised the Moldovan party that, in the context of EU eastern enlargement, the EU will get involved more actively in the conflict resolution efforts.
Vladimir Voronin also met the Romanian President Ion Iliescu with whom he discussed the ways of upgrading the status of the joint Moldovan-Romanian Inter-governmental Commission, and the Ukrainian President Leonid Kucima, with whom he talked about the process of setting up joint Moldovan-Ukrainian customs posts.
III. Studies, analyses, comments
1. Two Years in Government - Political Achievements
by Igor Botan
This April it has been two years since the Chairman of the Communist Party of Moldova (CPM) Vladimir Voronin was elected President of the Republic of Moldova and the Tarlev Cabinet was approved. These two events were the follow up of the new constitutional provisions and the absolute victory of the CPM in the parliamentary elections of 25 February 2001. To mark the anniversary, but probably also due to the start of the campaign for the forthcoming local elections, the press supporting the governing party has published a series of analyses and reports about the fulfilment of the electoral promises that the CPM made two years ago.
The representatives of the governing party are insisting upon the fact that they have kept their electoral promises fully and that if a different, non-communist government had accomplished as much as the current communist government did, then the opposition press, the independent media and the so-called "external forces" would have praised it enormously. There might be a share of truth to what the communists say. One can sense a subtle reproach to the opposition and independent press, which allegedly looks only at the failures of the current government and completely overlooks their achievements.
There is nothing special in this sort of approach. One can say that the behaviour of the media affiliated with the government party and the state one have prompted a similar reaction in the opposition press. Thus, the governmental media, which hold the utmost capacity for informational coverage of the country, in the past two years have praised the current government to the level of a cult, presenting it as almost faultless. Even when issues are acknowledged to exist, these are presented as the legacy of the previous so-called "democratic governments". There even have been reports that President Voronin is the "envoy of the Fortune" who was sent to save the Moldovan people from the current conundrum.
In fact, the actual state of things is somewhere in-between; obviously except the statements about the "providential role" of President Voronin, there can be no compromise about it: he was either sent by Fortune or not!
As for the actual political achievements of the communist government during the past two years, a major impact on them has had the establishment of the "vertical power axis", a prerequisite set in 2001 by President Voronin for accomplishing other objectives, such as the resolution of the Transdnistrian conflict, fighting corruption and poverty reduction.
It is the establishment of the "vertical axis of power" that was supposed to provide the necessary tools for these three objectives. Although through the constitutional amendments of July 2000 the President was endowed with powers relatively well balanced by those of the Parliament and Government, the President of the country and of the ruling party has succeeded in ensuring his access to all leverages of state power.
There are a number of explications for this. Firstly, President Voronin has excellent leadership skills, which helped him bring 71 out of 100 deputies on the CPM list to Parliament and thus gain a comfortable parliamentary majority enough to change the Constitution. There is no other CPM leader to match Vladimir Voronin. Apparently, his party mates, once deputies in Parliament, are still deeply grateful for the performance of their leader. These assumptions could explain the phenomenon of unity of the party and of the apparent lack of internal conflict, even though the policies promoted by the leader do not totally fit into the programme of the party.
Secondly, it appears that the model of the hierarchical structure inside the party was extrapolated onto the activity of state power bodies. This phenomenon is fully consonant with the communist tradition founded on the principle of "democratic centralism". This model also allows President Voronin to keep control of and influence the direction of the economic and political development of the country.
The opposition has criticised on different occasions the decision making practices which are first taken within party forums and structures, and then promoted to the level of public officials. Yet, from the juridical point of view, one can reproach nothing. Even though President Voronin's hold on the Moldovan political life is utterly disproportionate with his constitutional powers, this is a consequence of the personnel policy that he promotes and of which the parliamentary majority of his party seems to approve.
In this sense, President Voronin has succeeded to promote in key posts in Parliament and Government personalities that, according to all appearances, do not have any political ambitions of their own, distinct from those of the President. Instead, just like the communist deputies, they seem to be grateful for being promoted to the top of state power hierarchy. For comparison, one can think of the feelings of gratitude that the current Russian President Putin might have towards Boris Yeltsin.
The experience of CPM two years in government has shown that practically all the legislative proposals and the ones related to the personnel policy (Cabinet reshuffles) of the President have been approved and implemented without any objections. Thus, the model of "vertical axis" has proved a functional and applicable one. Its efficiency is yet to be discussed, though, given President Voronin's talk about the shortage of qualified personnel.
To build a stable foundation for the "vertical axis of state power", the model was extended to law enforcement bodies. The laws on the status of judges and the Supreme Council of Magistrates were amended to enable the head of state to control the appointments of judges. Recently, the President informed the citizens that, during his two years in office, a significant number of judges, prosecutors and high ranking police officers were fired as a result of the fight against corruption.
The opposition believes that this has been nothing but a banal cleansing of the personnel who was not convenient for the current government and an obstacle for the establishment of an authoritarian regime. Indeed, only two or three prosecutors, from the province, were brought to court and found guilty of corruption, all other law enforcement representatives being fired for other reasons. Instead, paradoxically, during the past two years, key CPM figures have featured in newspapers ever more often as involved in big corruption scandals. Therefore, one might think that the model of "vertical axis of state power" has had side effects. Moreover, it could prove that there is truth to the famous saying that power corrupts and absolute power corrupts absolutely.
Anyhow, a number of experts believe that the positive outcome of this model is that it helps achieve political stability and hence creates the necessary conditions for promoting coherent state policies. To a certain extent this is true. Yet, it was during the very period of promoting the doctrine of "vertical axis" that the most serious ever social conflict that lasted four months took place in Moldova. We refer to the street protests, which were held non-stop in January-February 2002. We needed two Resolutions of the Parliamentary Assembly of the Council of Europe to resolve the conflict between the power and the opposition, as a result of which the Round Table with Permanent Status was set up at the recommendation of the Council of Europe. Although the official propaganda says that the functioning of the Round Table is a good indicator of democratic accomplishment, it is in fact evidence to the lingering political conflict between the government and the opposition. The government does follow the recommendations of the Council of Europe intended to fix a number of problems in the activity of democratic institutions in Moldova to some extent. In response, the Council of Europe has had a positive reaction and the Republic of Moldova is to take over the chairmanship of the Committee of Ministers in May 2003.
Also, it is clear that the concentration of the decision making power in the presidential branch may cause serious political blocks. There have been serious problems. A notorious case is the conflict that emerged in autumn 2001 with regard to the Concept of Foreign Policy of the Republic of Moldova between the presidential apparatus and the employees of the Ministry of Foreign Affairs. Although the presidential advisers published the outline of their proposal of the Concept and the Ministry published a draft six months later, to date the Parliament has not put to vote a revised Concept of Foreign Policy. The Parliament should have done this for two reasons. The first reasons is that without a clear concept of foreign policy the behaviour of our authorities who fluctuate between plans for joining the Russia-Belarus Union and all sort of Eurasian customs unions, on the one hand, and the long-term plans for joining the European Union (EU), on the other hand, causes incertitude and tension. An example in this sense is the opposition initiative to hold a referendum on joining the EU, which was, strangely, blocked by the authorities.
The second reason is the fact that the current authorities, whose key objective has been the resolution of the Transdnistrian conflict, have decided to solve the conflict by internationalising it, although they had been vehemently opposed to such a solution before. Especially so as the federalist model of solving the conflict is being pushed from outside. It seems, though, that the lack of a clear foreign policy conception also prompts tension in the country and hesitation/anxiety on the part of the mediating countries and organisations. It is thus difficult to understand why Moldova cannot solve its problems with the help of its strategic partner, Russia, whose citizens are in control of a significant part of Moldovan territory.
The fluctuating behaviour has showed in other fields too, including in economy and in relations with the international financial organisations. The curious thing about the latter is that after a significant waste of time and opportunities, in the end the Moldovan authorities have to abide by their requirements. An example of how they explain this could be found in the Parliament Speaker's words: "At present, our party is a ruling party and therefore things have to be seen under a different angle of view… The Parliament has to abide by the requirements set forth in the memoranda signed with various international financial organisations. If we do not do it, then we could lose power in just a few months."
This example shows the extent to which the pyramid of the "vertical axis" has moved from the Marxist-Leninist principles lying at the foundation of the CPM political programme to the economic liberalism imposed by the international financial organisations.
Clearly, in order to generate coherent policies in the political, economic and social policies, the "vertical axis" should rely primarily on a stable ideological foundation. One year ago, the CPM Chairman, Vladimir Voronin, announced that the party was to revise its political programme. This has not be done yet, and it is obvious that the principles of functioning of the EU, whose joining has been named Moldova's priority during the Athens EU Summit in April 2003, are very different from the Marxist-Leninist principles fixed in the party programme. From this perspective, modernising the ruling party is ever more urgent given that Vladimir Ilyich Lenin in his work "About the Slogan "The United States of Europe" argued that such union was reactionary by nature and never possible.
In any event, a government based on the "power axis" doctrine is a government where the political will behind any aspect of the economic and socio-political lives resides in only one pole - the presidency.
2. Two Years in Government - An Economic Analysis
by Anatoli Gudim
On 19 April 2001, the Parliament of Moldova gave its vote of confidence to the Government Activity Programme, and the President approved its composition through his decree. The Prime Minister in his turn announced an intention to implement a plan of emergency measures "Fulger" ("Lightning") for the first 100 days…
Two years have passed. The Cabinet, in an anticipatory effort, adopted on 3 March 2003 the Decision "On fulfilment of the Government Activity Programme "Revival of Economy - Revival of the Country", the results of the socio-economic development of the country in 2002 and of the urgent measures and tasks taken to enhance effectiveness of the public administration bodies", which reads that "in 2001-2002 high rates of economic growth have been achieved and the living standards have increased significantly". Further on, the paper provides data on growth of the GDP, production and services, low inflation, growth of wages and pensions. It especially mentions that the Cabinet "succeeded in avoiding a default" and expresses particular gratitude to one of agencies - Fitch Ratings - for upgrading Moldova's rating as regards long-term financial engagements from DD (risk of default) to B- and hence slightly improving it. Yet, even the new rating is still below the one Moldova had in the complicated 1998 during the regional (Russian) financial crisis. Still further on, "at the same time, analysis of the socio-economic situation has revealed certain reserves in functioning of the central and local public administration bodies, as well as a certain delay in execution of the Government Activity Programme". But the only thing mentioned specifically refers to the under-collection of taxes into the state budget.
The Cabinet decided: "1) to take account of the course of carrying out the Government Activity Programme … and the results achieved in 2002, 2) to approve the Action Plan for increasing the effectiveness of the activity of public administration bodies and the Action Plan on execution of the 2003 budget". The former plan includes 55 items and is made up based on proposals of ministries and departments, whereas the latter plan includes 44 items and is the produce of the Ministry of Finance. Controls are to be undertaken on a quarterly basis, by 15th of each next month. The top priorities (term of execution was due 31 March 2003) as follows: "developing the Strategy of the Public Sector Reform" and "developing the final draft of the Strategy of Economic Growth and Poverty Reduction". The term expired; the controls are over; the paperwork… is still being drafted.
This far from univocal Cabinet paper mirrored the style the Government works: optimism with no long-term priorities, attention to the form and quick reaction with negligence of deeper processes going on in the economic and social spheres.
Administrative and to a large extent populist Government actions have created in 2001-2002 a phantom positive result, which, on the surface, showed in form of GDP growth and higher expenditures for social needs, including those for education and social assistance. Yet, cumulatively the Moldovan economy has been showing signs of imminent danger. They become apparent both through the alarming amount of the state debt, both foreign and domestic, and through the acute shortage of investments, slow process of creating new jobs, mass labour migration of the most active part of the Moldovan able population abroad, the misbalance between the domestic demand and supply (hence the increase in imports), weakening of the role of exports as an engine of economic growth, the increasing trade balance deficit of the country. It is not only wrong to overlook the existing limitations of economic growth, but potentially dangerous for the future of the country. Of course both the Government and the people are hectic about the 16% GDP growth registered over the past three years. For the sake of the truth, one should bear in mind that value of the Moldovan GDP in 2002 amounting to 22.04 billion MDL (US$1.62 billion) is 19% or one fifth lower the GDP in 1997, while Moldovan exports in 2002 worth US$666 million were US$224 million below the values of exports in 1997. Apart from that, a closer look at the structure of the GDP and its increment reveals that the input of the production sector (industry, agriculture) is rather modest. According to the Ministry of Economics' data, out of the 7.2% GDP growth in 2002, the growth of the added value of the industry and agriculture accounts for 1.6% and 0.9% correspondingly as compared to the 2.6% in services and 2.1% on taxes on goods and imports. As we can see, unfortunately no quality change has occurred in the Moldovan economic growth yet. On the other hand, it is impossible to change the structure of growth over two-three years as it requires structural reforms and more time.
In the meantime, the Government has not resolved on the main thing yet, namely how can the entrepreneurial and investment climate be improved? How can the inertia of the state administration be fought? What our practical steps as a future close neighbour of the enlarging European Union should be?
One has to admit frankly that in 2001-2002 due to well-known reasons (regardless of the pressure from the International Monetary Fund and the World Bank) have not prompted any constructive changes to the economic policy. Laws have been amended, initiatives to enhance the state regulation methods in the production sphere and proposals for social measures to the extent allowed by the limited resources of the state budget have been launched. However, there has been a clear slowing down of utterly important and at times politically difficult structural reforms. Improvement of the business environment failed, as well as overcoming of the distance between banks and the real sector and reducing shadow economy did. In addition, clumsy administration has worsened relations with foreign investors and international financial organisations.
Since the conventional reserves for economic growth in the country have been exhausted, as President V. Voronin also once admitted, it is not necessary to come forward just with optimistic forecasts, but rather to establish the priorities of economic policy and well co-ordinated practical measures to modernise the Moldovan economy.
To do that one needs political will, stability in the country and in the Government itself. Unfortunately, there remained in its current composition only a small part, only 7 out of 17, of those who were called to the Government two years ago. In a series of ministries and departments the leadership have changed three times over the past twenty-four months. Is the Cabinet a single team indeed?