Democracy and governing in Moldova
II year, no. 26, 16 March 2004
Activity of public institutions
Studies, analyses, comments
I. Activity of public institutions
1.1 Parliamentary immunity suspended
Previously, Christian-Democrats were liable of administrative offence, now they are liable of penal offence for profaning Russian Federation state symbols. Under Penal Code, profaning national or state symbols (flags, coat of arms, anthem) of the Republic of Moldova or any other state - is sanctioned by penalties worth 500 units (10,000 Lei) or from 2 to 6 years in prison. "Braghis Alliance" deputy joined the company of Christian-Democrats whose parliamentary immunity was previously suspended. It was illegal privatisation, rather than protest rallies that served grounds for suspending his immunity.
1.2 Legal acts
Law on VAT exemptions of imported vine is aimed at supporting the revival of vine plantations, by exempting from VAT vine imported to Moldova. The law was lively debated, there were voices claiming that the law would affect the state budget and that Government should have come with the initiative before 2004 budget was adopted. In the end, majority faction voted in favour of the draft, as did opposition deputies. The law does not provide for concrete mechanisms of overseeing the law enforcement.
Parliament re-voted the Law on publishing international treaties sent back by the President of the Republic of Moldova. The law provides that international treaties ratified by Moldova should be published in Official Monitor within one month of entering in force. Ministry of Foreign Affairs should oversee this. Noteworthy, under Moldovan Constitution international acts Moldova is part to, have the same force as the domestic legislation and are to be enforced likewise. However, unless the treaties are published they have no legal effect.
Under the Law on supplement to the pension for residents of Copanca commune, pensioners residing in Copanca commune, situated on the left bank of Dniester, should be entitled to a supplement ranging from 50 to 100 Lei so as to bring their pension in line with those paid in break-away region. The estimated cost of the law is over one million Lei, which is to be covered from state social security fund. Therefore, Government is to come with concrete recommendations and mechanisms on how to cover the costs.
Law on the modification and completion of legal acts on retirement and social care provides for privileged terms of retirement for women who gave birth and raised until the age of eight, five or more children. Those women may retire at the age of 54. In addition, privileged terms were set for persons working under harmful or difficult conditions, retirement age for men being 54 and for women 49. The legal framework regulating retirement has been completed with a single norm providing that minimal work experience required for being eligible to age pension would be no less than 30 years. The Law on Veterans was completed with provisions on supplements to pensions for special merits to all categories of veterans, including those who retired from military forces.
(For further details on Parliament activity see http://www.e-democracy.md/en/comments/legislative/)
In the aftermath of the bread price-overrating scandal, at the order of President Voronin Government ousted Alexei Roibu, Head of the Centre on Fighting Economic Crime and Corruption and Gheorghe Lungu, Deputy Chief of the Agriculture and Environment Department of the State Chancellery.
Government established a task force within the Ministry of Agriculture and Food Industry to be headed by Minister Dmitri Todoroglo entrusted to work out measures to "supply Republic of Moldova with bread". Under the Government ruling the "task force shall identify 2-3 domestic companies able to import in March 25 thousand tones of grain at the lowest prices, so as to ensure food safety of the state".
By the end of the month the said companies are to be selected via a tender. They would have to import 25 thousand tones to be sold on the domestic market. The revenues from the sale of imported grain shall be used to replenish state reserves.
Ministry of Economy has already researched the grain prices and terms of delivery on the international market. The research indicates that Canada sells the grain under the most favourable terms.
As it stands now, Republic of Moldova grain reserves reaches 30,000 tones, amount sufficient until April 15. The amount of grain harvest in 2003 was ten times less over 2002, i.e. only 101,000 tones.
State officials and high rank officials would no longer be obliged to disclose all their income, assets, including that of their families and real estate in their income declarations. As of now, they would have to file a declaration on their net income for the last year. Government endorsed a draft law in this respect on modification of the Law on disclosing and control over the income and assets of state officials, judges, prosecutors, public officers and certain high rank officials.
Another Governmental motion extended until January 1, 2005 the deadline for enforcing Government ruling on "customs declaration to be filled by businesses and manufacturers from the Eastern rayons of the Republic of Moldova on goods that entered or exited the state customs area". The resolution is aimed at fighting smuggling, preventing violation of customs requirements as well as at overseeing economic exchanges across the Eastern border.
Government also approved the new membership of the Economic Council under the auspices of Prime Minister. The consultative body includes 25 persons representing private businesses, financial and banking institutions, local public administration, Chamber of Industry and Commerce and association of agricultural producers. Alexandru Sirbu, Chair of the Moldovan-American joint venture "Sun Communications" (former Sun-TV") was appointed Chair of the Council, whereas Iacob Tihman, Director of "Efes Vitanta Moldova Brewery" and Victor Hvorostovschi, President of FinComBank were appointed as Deputy Chairs. The council also includes such figures as Vasile Chirtoca, President of "DAAC-Hermes", Sergiu Boret, Director of the "Acorex Wein Holding" Joint venture, Victor Turcanu, President of Victoriabank, and Vasile Mirzenco, President of National Farmers Federation.
On March 10 Government passed another resolution on indemnifying bank deposits at the Banca de Economii (BE) of the citizens born before 1930. Under to BE estimates, 44.2 thousand peopled filled applications to receive their indemnity between October 2003 and January 2004. An estimated total of 28.2 million Lei would be needed to cover for indemnities. Noteworthy 48 million Lei are allocated in this respect in the state budget for year 2004.
3.1 "Grain Mafia"
On February 28 at the Supreme Security Council session President Vladimir Voronin talked the challenges the country faces in bread supply. According to the Presidency press service, President Voronin indicated he hold data "proving the existence of a Mafia network in bread supply" that was provided not by law enforcement forces as one would expect, "but rather by a group of people, real patriots, who do care about their fellow citizens and the state of affairs in the country". According to that data, which of course needed to be checked, "huge amounts of wheat flour for the state needs were purchased from foreign suppliers at 177 USD per tone and delivered to "Franzeluta" State Enterprise by intermediary companies at 377 USD per tone, which has inevitably propelled further upwards the price on bread".
President Voronin criticised relevant state authorities and called an extraordinary governmental session. As it was already mentioned Alexei Roibu, Head of the Centre on Fighting Economic Crime and Corruption and Gheorghe Lungu, Deputy Chief of the Agriculture and Environment Department of the State Chancellery were ousted. Furthermore, President insisted on ousting Victor Cojocaru as Director of "Franzeluta" and other decision makers within the company; and "reprimanding Minister of Agriculture and Food Industry, Dmitri Todoroglo". President also demanded Prosecutor General to start a criminal investigation that he would personally oversee.
In the eyes of political analysts, the mere fact that the Government was not dismissed President repeatedly pointed that in a "normal state" it would have resigned, indicates that President's move is more of an pre-electoral stunt. Another reason to believe this is the fact that the 177 USD acquisition price cited by the President refers to the grain rather flour price. Anyway, it remains to be seen whether the President proves right or wrong. The bread price, which supposedly after price overrating is despite the dealt with should drop, as well as the judicial investigations would give us a clue in this respect.
3.2 Trip to Kuwait
On March 6-7 President Voronin paid an official visit to Kuwait. During his visit, which was rather unusual geographically, President Voronin met Kuwait Emirate Jaber Al-Ahmad Al-Jaber Al-Sabah, Prime Minister Jaber Al-Ahmad Al-Jaber Al-Sabah and Chair of the National Assembly, Jassem El-Khurafi. The parties talked ways of boosting political dialogue and economic ties, as well as signing agreements to avoid double taxation, fight tax evasion and foster technical and scientific co-operation.
II. Economic polies
1. Crediting policy
Dropping interest rates on credits granted to agricultural producers from 22% to 25% will soon be on Government agenda. According to Prime Minister, albeit the financial and banking system was merely in private hands, Ministry of Finance would come up with additional mechanism to simplify the pawn system and drop the interest rates on contractual credits.
2. Guaranteeing bank deposits
The Law on Guaranteeing Bank Deposits of natural entities is yet another law regulating the banking system. This mechanism of protecting the deposits has become operational once it was possible to reach a consolidation and stabilisation of the banking institutions.
The law was developed in line with generally accepted standards as provided in European Union Directive 94/19/EC of 30th May 1994, requirements of the International Monetary Fund, and those of the International Association of Deposit Insurance. Under the law all the banks are obliged to participate in the scheme of guaranteeing deposits via a special fund, to which they'll allocate funds on a quarterly basis. The fund would have a bank account at the National Bank to accrue funds for compensating inaccessible deposits. The fund would be equal to at least 7% of the total of guaranteed bank deposits.
Given that the great majority (around 97%) of depositors (natural entities) hold deposits of less than 4,500 Lei, the law provides for a ceiling of guaranteed deposits equal to that amount. In case the deposit exceeds that amount, the fund may apply a variable ratio to the aforesaid ceiling so as to adjust deposit payments to the amount available.
3. International aid
World Bank would grant financial assistance to the Republic of Moldova even if the latter does not have a conditional agreement with IMF. The aid would go to social projects as well as to boost private sector. The amount as well as the means of payment shall be established as part of the new Country Assistance Strategy for years 2004-2007. The decision was taken in consultation with Chisinau and is to be presented to the WB Board of Directors.
1. Mediators meeting in Belgrade
On 24 and 25 February the mediators from the OSCE, the Russian Federation and Ukraine met in Belgrade to discuss the comments of the Moldovan and Transnistrian sides on the settlement plan prepared by the mediators last autumn. The mediators agreed to request the Transnistrian side to submit more detailed proposals on the plan and to hold separate talks with the two sides in the next few weeks. During a series of consequent separate consultations with the Moldovan and Transnistrian sides, the mediators agreed to hold a new round of three-sided talks on 24 and 25 March. By that time it is expected that the Transnistria side will present its detailed written proposals on the plan developed under the OSCE aegis last autumn. The Transnistrian earlier said they would do this after the presidential elections in Russian on 14 March.
A series of commemoration events of the victims of the spring-summer 1992 Transnistria war took place in Moldova starting 2 March, the day which marked the 12th anniversary of the start of the military hostilities on the Nistru River. The official message of commemoration released by the Prime Minister Vasile Tarlev read: "Let the patriotism and heroism of those who fought for the independence and integrity of our motherland inspire us in our daily efforts at reintegration … and let the tragic events of the spring 1992 never repeat". Other commemoration events included church services, deposition of flowers to war monuments and meetings of the veterans of the 1992 war.
Local commentators have noted the duplicity of the position of the ruling party with regard to the events of 1992. While traditionally they account for the 1992 military clash as one driven by "extremist" motives, they still have to put up with calling the combatants "defenders of the territorial integrity and sovereignty of Moldova".
During the commemoration week, the latter, in the person of Ilie Ilascu, former Moldovan detainee in Tiraspol, and currently senator in the Parliament of Romania, put forward an ultimatum to the Transnistrian authorities to free the rest of Moldovan detainees by 1 May, or they will use all means to free the imprisoned themselves. According to a series of unprecedented revelations made by Ilascu, he and his colleagues should be regarded as prisoners of war as during the 1992 events they were recruited by the Moldovan secret services and given orders to "eliminate the enemy." A trial is under way at the European Court of Human Rights in Strasbourg, which is to pronounce by the end of April a verdict on the "Ilascu versus Moldova and Russia" case, whereby among other things Ilascu accuses Russia of aggression on Moldova in 1992.
3. Russian weapons
During a visit to Moscow and Chisinau on 3-4 March, the assistant of the US State Secretary for Arms Control, Stephen G. Rademaker, said that the US will not ratify the Treaty on Conventional Forces in Europe (CFE) unless Russia fulfils its commitments to withdraw its weapons from Georgia and Moldova.
"If CFE is indeed as important to Russia as it says it is, then Moscow need to find the ways to cancel the Transnistrian debt and to get to an agreement with Georgia", Rademaker was quoted by Basa-press as saying. He also mentioned that the withdrawal of Russian troops from Georgia and Moldova is of special importance to the US.
These statements followed a series of statements by Russian officials that Russia might request the re-negotiations of the CFE treaty in light of the recent transformations in the politico-military situation in Europe.
On the other hand, the ad interim Russia Defence Minister Serghei Ivanov said on 5 March in Paris during the Russia-France Council on Cooperation and Security that Russia makes all efforts to honour its commitments to withdraw its troops from Georgia and Moldova. "Often the fate of CFE is related to the Istanbul agreements. Russia does everything to keep to those agreements, in the way they have been articulated", Ivanov was quoted as saying by Russian media.
IV. Foreign affairs
1. European integration
1.1 VI reunion of the Republic of Moldova - EU Co-operation Council
The VI reunion of the Republic of Moldova - EU Co-operation Council, a mechanism institutionalised via the Partnership and Co-operation Agreement signed by Moldova and EU in 1998, and entered in force in 1998 was held in Brussels on February 24. Topping the agenda was the settlement of the Transdnistrian conflict. In this respect, Prime Minister Tarlev who headed Moldovan delegation asked EU officials to establish a monitoring mission over the Transdnistrian border with Ukraine without involving the parties to the conflict. As it was the case of previous reunions, European Union's foreign policy and security chief Javier Solana once again reiterated EU's commitment to work along OSCE and international mediators towards identifying long-term political solutions to Transdnistrian conflict. EU officials briefed Moldovan counterparts on the extension for another year of the restrictions on the travel of 17 Tiraspol leaders.
European officials were also committed to give their full support to the elaboration of a new Moldovan Constitution, take an active part in the post-conflict reconstruction and be part of the multinational peacemaking forces. In addition, the two parties reiterated the importance of boosting co-operation on issues of migration, justice, internal affairs and customs that would be subject to European assistance by means of the TACIS Programme.
The recommendations provided by the European officials referred to: consolidation of the co-operation between the two countries, bringing domestic legislation in accordance with European standards, improving business climate, as well as special programs on fighting corruption and money laundering.
Throughout 2004-2006 EU will allocate 500 million Euro for Russia and New Independent States, funds to be distributed based on the country performance and areas of need as identified by domestic governments.
1.2 EU-Republic of Moldova Action Plan
Moldovan delegation headed by Tarlev participated in Brussels at the second round of the EU-Moldova Joint Action Plan talks. At the negotiation table Moldova side voiced its own vision over the document and insisted on including a separate chapter on Transdnistria. Other propositions Moldovan side came up with included country involvement in various European programs and communication networks; extension of European Investment Bank mandate; preferential visa regime as well as an asymmetric trade agreement.
As for the latter, there are growing signs that Brussels is willing to sign such an agreement and open up European market to Moldovan goods and services. Negotiations of the agreement are due to start in March. Until then Moldovan side is to come up with an efficient mechanism of confirming the origin of exported goods.
Back from Brussels, Moldovan Minister of Foreign Affairs Andrei Stratan stated "we managed to prove of being able to achieve all the targets set for the Republic of Moldova", which ideologically were not that much different from those set for accession countries, just in another wrapping, i.e. Joint Action Plan.
2. Stability Pact for South Eastern Europe
2.1 International conference "Republic of Moldova within the Stability Pact - Achievements and Perspectives"
Chisinau hosted on March 1 an international conference entitled "The Republic Of Moldova In The Stability Pact - Achievements and Perspectives". A delegation of Stability Pact headed by its Special Coordinator Erhard Busek flew to Chisinau for the event. President Vladimir Voronin awarded him the Order of Honour "as a sign of deep gratitude for the efforts undertaken in view of Republic of Moldova integration in the European structures and significant contribution towards promoting a favourable image of the country on the international arena".
In his speech President Voronin reiterated Moldova's interest to join European Union and the country's interest in taking part in the Stability Pact projects. He also called on developing and implementing joint projects with partners in South-Eastern Europe and assured that Moldova wouldn't fall short of propositions in this respect.
In his turn Erhard Busek recommended Moldovan authorities to continue the path of reforms and learn the experience of Stability Pact member states which would soon join the European Union and thus avoid unnecessary efforts. According to Busek to approach the E.U. Moldova should ensure a sound investment climate, fight more actively organised crime, diversify energy sources and gradually join various initiatives within the Pact and other organisations.
2.2 Free Trade Agreement with Croatia
Republic of Moldova and Republic of Croatia signed a free trade agreement on February 27 in line with the provisions of the Stability Pact for South-Eastern Europe. The document developed in accordance with the WTO standards provides for gradual removal of customs barriers between the two countries until January 1, 2006.
2.3 Free Trade Agreement with Bulgaria
Bulgaria is the only country member of the Stability Pact that Moldova didn't conclude a free trade agreement with. However, such an agreement might be concluded at the end of March or beginning of April as the two countries already completed the negotiations on the document.
V. Studies, analyses, comments
Public television: to be or not to be?
Alex Florea, 16 March 2004
The issue of public television has been in the public gaze quite regularly. And there are enough grounds for this, to mention just frequent changes to the laws on public television, establishment of a strike committee and the strike that followed, Observer Council and election of the company Chair, censorship, statements of the Anticensorship Committee, persecution of journalists that took part in the protest rallies, etc
Liberalisation of capital flows
Sorin Hadarca, 16 March 2004
Liberalisation of capital flows has been right from the beginning a rather controversial issue in the Moldovan foreign exchange policy. Restrictions on capital flow imposed on Moldovan citizens stem from the efforts undertaken by authorities at the dawns of independence in order to keep a stable exchange rate of the national currency