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Democracy and governing in Moldova
II year, no. 27, 30 March 2004
Activity of public institutions
Studies, analyses, comments
I. Activity of public institutions
1.1. Calm waters
Spirits have calmed down in the legislature with political debates ending and deputies shifting their attention to less important legal acts.
1.2. Legal acts
Law on Investments in Entrepreneurship provides legal, social, and economic principles of investment activity, investor's rights and responsibilities, mandate of pubic authorities in the field, guarantees provided by the state to domestic and foreign investors, and procedures for joint ventures operation.
Opposition parties criticised the chapter on state guarantees to compensate damages incurred by investors, on the grounds those were just words not backed up by adequate policies with investors being persecuted (Union Fenosa, Farmaco, Megadat, expropriation of "Dacia" hotel).
Generally speaking, the law did not add any new guarantees or methods of fostering investors. The latter shall be included in the fiscal, customs, and property law. It only establishes the general framework of the state policy on investments. The latter will be developed and enforced by the Government, in particular through the Ministry of Economy.
Law on cancelling penalties and fines to rayonal thermo-enterprises annulled the penalties and fines incurred by rayonal thermo-enterprises as of January 1, 2004. Their debt is estimated at 22.5 million Lei. Another 22.5 represent the fines and penalties. The enterprises have no chance whatsoever to pay the debts incurred, whereas by annulling them the state hopes to boost the sector.
Another legal act passed by the Parliament, Law on modification of the law on taking in and out of the country goods by natural entities is:
- Granting natural entities the right to take out of the Republic of Moldova: goods for trade or manufacturing activity in amount not exceeding 100,000 Euro; metal or precious stones pieces manufactured by authorised businesses and that do not exceed the aforesaid amount;
- Granting natural entities resident in the Republic of Moldova the right to bring in vehicles in use for no more than 10 years for a time period of up to 45 days without any customs fee on condition: vehicles should be registered in other countries on the name of persons residents in the Republic of Moldova; a guarantee (in national or foreign currency) shall be deposited at the customs checkpoint equal to twice the taxes due; after 45 days vehicles shall leave the soil of the Republic of Moldova and the guarantee shall be refunded.
Law on completing Code on Administrative Offences introduces a new article - Breaching the law on state representation in economic enterprises. This article provides sanctions ranging 3,600 and 54,000 Lei for: violation of rights and legal interests of the state during the establishment, operation, reorganisation and liquidation of societies, thereby the state shall be ascribed the role of participant having unlimited rights or its participation quota in registered capital shall be decreased, in cases prohibited by law; concealing the conditions in which a state representative holds or has got a patrimonial interest in the economic enterprise and failed to notify authorised bodies; concealing data on economic or financial activity or any other information that state authorities is entitled to request, etc.
Law on the modification of legal acts regulating operative activity, holding guns and licensing of certain types of activity brings a number of legal acts in accordance with the provisions of the new Code on Penal Procedures and Law on Private Detectives and Security.
In addition legislative body ratified a number of international treaties:
- European Convention on transferring indicted persons and Additional Protocol to the Convention ratified by Parliament on March 11, 2004.
- Convention between Republic of Moldova and Slovak Republic on eliminating double taxation and prevention of fiscal evasion on income and asset tax is aimed at: eliminating double taxation, preventing fiscal evasion, sharing the right on taxation among contracting countries, eliminating fiscal discrimination under any form.
- Protocol on ceasing the Agreement on establishing a Eurasia Union "Coal and Metal" due to the fact that the Union didn't fulfil the very purpose it was established for.
(For further details on Parliament activity see http://www.e-democracy.md/en/comments/legislative/)
Constantin Mihailescu and Igor Semenovscher were designated to head the newly emerged structures after the restructuring of Ministry of Environment, Construction and Territory Planning, namely Ministry of Environment and Natural Resources and Department of Constructions and Territory Planning respectively.
Other reshuffles brought Svetlana Dohotaru to the position of Senior Director of the aforesaid Department, Olga Goncearova to the Head of Interethnic Department thus replacing Tatiana Mlecico, Ion Dron would head Legislative Centre replacing Parascovia Copacinschi. Aurelian Danila was ousted from the position of Dean of Academy of Arts, Theatre and Movie, whereas Iurie Moraru from the position of Head of the Government Press Service. Other reshuffles envisaged Adrian Fetescu being appointed as Deputy Director of the Licensing Chamber and Andrei Neguta, Republic of Moldova Ambassador to France being designated to cover Spain as well.
- On March 17, Government passed a decision allotting a total of 3,500,000 Lei throughout 2004 for scientific research as part of state research and development programs, and 5,315,750 Lei for research and development and transference of know-how based on a tender. Government entrusted Supreme Council for Science and Technological Development to work out within one month a National Plan for research and development for year 2004, within 6 months the evaluation methodology of scientific research conducted as part of state-run programs, and by April 1 the remuneration mechanism of persons involved in both kind of programs.
- Government also approved the Regulation and structure of the Department of Constructions and Territory Planning, list of institutions and organisations under its subordination, as well as list of institutions where the Department administers the state share.
- As of April 1, pensions paid from the state social security budget shall be indemnified by 22.3%. Several factors like, increase in consumer prices by 15.7% last year and increase of the average salary in economy by 28.9% were considered when establishing indemnifying ratio. Therefore, 623 thousand people would have their pensions increased. Noteworthy, the average pension per country amounts 217 Lei.
- A draft on modifying the law on acquisition of goods, works and services for the state needs (April 24, 1997) was on Government agenda on March 24. The draft developed by the Ministry of Economy intends to simplify the acquisition of goods, works and services from public funds. It provides for decentralisation of the current public acquisition mechanism. Under the draft, National Agency on Public Acquisitions will only publicise the tenders, while each state beneficiary would hold the tenders on their own and be entitled to pass decisions without prior consultation of the Agency.
2.3. Fighting corruption
Commission entrusted to work out the National Strategy on Fighting Corruption convened on a work session on March 19 and approved draft strategy and Action Plan with certain amendments. The latter refer to including new chapters "that will provide the necessary conditions for mass media to conduct journalistic investigations as well as on liability of control bodies upon incurring damages to businesses". Within five days Commission Secretariat shall operate the amendments and then submit it to Parliament.
As a follow up to President Voronin's call to build an informational society in the Republic of Moldova, a decree to this effect was passed on March 19. Under the decree, building informational society in the Republic of Moldova is set as a top national priority. It also defines the four tasks Government would have to undertake in this respect, two of them are establishing the National Commission for Building Informational Society in Moldova and working out by the end of the year a Strategy and an Action Plan in this respect.
Indeed President's initiative is a worthy one. It remains to be seen whether it wouldn't be compromised as it happened with the Strategy of European Integration which wasn't developed yet, although it should have been ready by March 14, 2003.
3.2. Tasks for the Academy of Science
On the eve of general assembly of the Moldovan Academy of Science, on March 17 President Voronin paid a visit and met employees of the Institute of Economic Research, Institute of Philosophy, Sociology, Political Science and Law; Institute of Interethnic Research and Genetics Institute. President talked consolidating collaboration between the Academy of Science' institutions and public institutions so as to make full use of scientific research in developing public policies.
A catastrophe, that's how President viewed Moldovan science. He called on a structural reform and outlined the main targets in this respect, namely "establish a favourable environment to boost innovations, /…/ developing the legal framework allowing the sale of scientific research results; /…/ establishing the legal framework that would allow the transition from flawed state funding in research to state investments in science and innovation /…/ establishing conditions for it (science) to interact with education". In this respect President outlined ruling party's intentions in the field of science: concentrate state allocations for scientific research so that they could be accessed only through the Academy of Science; have all scientific institutions under the subordination of the Academy of Science; accrediting Academy institutions; changing Academy structure so that Supreme Council for Science would become a collective executive body of the Academy; raising salaries to scientific researchers; concluding an agreement between Academy and Government that would outline each other's responsibilities.
3.3. Session of the Ministry of Energetics' College
In his speech at the Ministry of Energetics' College, President Voronin criticised its activity. He dubbed it a "central controller" and pointed that it would become "the centre" of the industry only after reorganisation. For that to happened President believed the Ministry should: modernise distribution networks, cut production costs, reduce wasted energy, enforce in the next 3 years the Strategy of developing the capacity to generate electricity so as to contribute to energetic sustainability of the country; and decentralise heating system, etc.
II. Economic polies
1. Monetary and credit policy
On March 26, 2004 National Bank Council of Administration decided to keep interest levels at the level set back in December 2003. National Bank officials claim the decision took into account the evolution of macroeconomic indicators, inflation rate, and monetary indicators.
Also, the basic annualised interest rate was set at 14% and is to be applied for refinancing of commercial banks via REPO operations of buying state securities and T-bills for a two month period. Interest rate on lombard facility, overnight credits and commercial bank's deposits attracted by National Banks were kept steady at 16%, 17% and 3% respectively. Interest rate on long-term credits (over five years) reached 11.5 %.
2. Banking sector
In 2004 acquisition of foreign currency in cash from the population has exceeded by far the amount of sale. In January commercial banks bought 24.7 million USD more in cash than in December 2003. In February the difference reached 30.3 million USD. Also in January financial and banking institutions bought 9.3 million Euro, whereas in February only 6.6 million Euro. Throughout 2003 banks gained 302 million USD and 103 million Euro as a result of difference in buying and selling rates and there is evidence that the gains would further grow. National Bank seeking to fill its foreign currency reserves, accounts for about ? of foreign currency buying operations. At the beginning of the year net foreign currency reserves amounted 159.83 million USD, whereas at the end of February they reached 176.69 million USD. Gross foreign currency reserves are estimated at 310.91 million USD and cover for 2.2-2.3 month import. Such a surge in National Bank's assets has led to a considerable increase in M0 money supply. Based on the evolution of the main monetary indicators one may assume that by the end of first quarter National Bank's foreign currency reserves would reach 320 million USD.
3. Trade policies
In 2003 amount of goods manufactured in free economic zones rose 1.5 over last year. Moreover, 75% of it was exported. Last year residents of free economic zones transferred 64.9 million Lei to the state budget. Free Economic Zones proved to be an efficient mechanism of the investment policies pursued by the state. Decision-makers at the Ministry of Economy say those zones play an important role in the economy of the regions. For instance "Valcanes" transferred 5.6 million Lei to the state budget, i.e. 48% of the rayon budget revenues. A similar situation is in Taraclia with "Tvardita" being one of the main sources of revenues. Net investments placed in that region last year reached 51.3 million USD.
Government announced a new tender for its 99.97% share in "Nis-Struguras" enterprise. In the previous round, last year, only one company had bidden, i.e. Russian "Parom" from Moscow. Therefore privatisation was adjourned. Privatisation followed after investor failed to comply with assumed obligations as provided for in the privatisation contract. Government sources say the contract was annulled as "Tarom" failed to pay in due time the 1.5 million USD it had pledged to invest in line with the contract signed by both parties and laws in enforce.
1. The official Chisinau urges the resumption of talks in the five-sided format
During a press conference held on 16 March in Chisinau, the Moldovan Minister of Reintegration Vasile Sova called upon the mediators to determine an exact date for the resumption of talks in the pentagonal format. According to Minister Sova, the prospects for resuming the talks are real; however, additional efforts need to be made. He urged the mediators on behalf of Russia, Ukraine and the OSCE to initial the necessary consultations in order to summon a five-sided meeting by the end of March, according to the agreements reached in Belgrade.
Vasile Sova reiterated Chisinau's concerns with regard to the unilateral actions of the Transnistrian administration, which are intended to destabilise the situation and tension the relations with Chisinau, referring to the incidents around the Moldovan police commissariat in Tighina (Bender) and the situation of Romanian language schools in Transnistria. Thus, Sova was quoted by Basa-press as saying that: "one can sense the symptoms of a crisis situation, which could be prevented by resuming negotiations in the widest format. /.../ However, if our efforts prove without result, we will probably have to call for a special meeting of the Permanent Council of the OSCE in Vienna ".
On the other hand, William Hill, the Head of the OSCE Mission to Moldova, told the press on 16 March that the Transnistrian authorities are tergiversating purposefully the resumption of talks in the five-sided format. According to Hill, the Transnistrian authorities have declined repeatedly the OSCE requests to name an exact date when they would be available to attend a five-sided meeting along with the Moldovan, Russian, Ukrainian and OSCE representatives.
2. The Russian elections and the priorities of the Transnistrian "foreign policy"
"The foreign policy of Transnistria has remained unchanged and is historically oriented towards priority links with Russia and Ukraine. The maintenance and consolidation of these links represent our strategic priorities", the Transnistria leader Igor Smirnov was quoted as saying by Transnistrian official news outlets during a pres conference on 22 March in Tiraspol, which was gathered to make an assessment of the political year 2003 and set the foreign policy priorities for 2004. Smirnov thanked the two states for successfully conducting the peace operations in the region and for their contribution to the conflict settlement process. Furthermore, he expressed hope that the two states will continue to play a prominent role both in the settlement process and in the post-settlement reconstruction efforts.
The assertive tone of Smirnov's statements can be easily attributed to the results of the presidential elections in Russia. On the eve of the election, Smirnov met in Moscow with the Russian President Vladimir Putin, with whom he discussed the Transnistrian issue. On the day of the voting Smirnov called upon Russia to increase its role of the power that ensures the "peace and security" in Transnistria and urged Russia to set permanent military bases in Transnistria and to speed up the process of acquisition of Russian citizenship by the inhabitants of Transnistria. Thus, one can easily understand the context within which the Transnistrians have been calling lately for a final and just settlement of relations between Chisinau and Tiraspol, and for the legal consolidation of the Transnistrian statehood on the international arena.
3. The evacuation of Russian weapons from Transnistria
A trainload of approximately 100 tons of Russian weapons was evacuated from Transnistria on the night from 24 to 25 March. This has been the first trainload of Russian weapons to be evacuated from the region this year, after a three-month pause. The spokesperson of the OSCE Mission to Moldova Claus Neukirch confirmed the fact that the load was evacuated, but specified that the OSCE Mission military experts were not allowed to witness the loading, but were let in only at the end of the operation. According to Neukirch, the Transnistrian authorities have not given a date for the transportation of the next load of weapons.
4. The Kozak Plan in the attention of the international community
Ambassador Stephen Pifer, Deputy Assistant of the US State Secretary, expressed in Moscow confidence that in the result of the visit to Washington of the Russia Deputy Foreign Minister Veaceslav Trubnikov this April, the Russian settlement plan, also known as the "Kozak Plan", will be "injected new energy". According to Russian news agencies, quoted by Basa-press, the American diplomat said that Russia should assume a part of the blame for the failure of the Kozak Plan, because the plan provided for the participation of a 2000 troops strong Russian peacekeeping contingent instead of the maximum 500 that Russia had announced within previous consultations with European officials.
Referring to the same Kozak Plan, the electronic issue of the Moscow daily "Nezavisimaia Gazeta" published on 25 March a comment by the German political analyst Aleksander Rahr. The comment argues that the plan elaborated by one of the most promising men from the Putin team, Dmitri Kozak, was intended as a model for recovering the former Soviet republics. Thus, writes Rahr, the confederation model drafted for Moldova, in the event of success, would have been proposed to Georgia, then to Armenia and Azerbaijan. The transformation of the former Soviet republics into confederal states would have gradually led to the transformation of the CIS into a quasi-confederal entity. Rahr argues that Russia will oppose any proposals for international peacekeeping operations in the former Soviet area, and as long as the West keeps the door to the European Union and NATO closed for the Georgians, the Moldovans and the Ukrainians, Russia's influence will only be rising. Thus, concludes Rahr, "the fate of the partnership between Russia and the West during Putin's second mandate will be decided not in the diplomatic saloons of Brussels, Washington, London, Rome or Berlin, but in such hot spots as Batumi, Suhumi or Tiraspol".
IV. Foreign affairs
1. European integration
According to a press release issued by the Ministry of Foreign Affairs, the last round (the 3rd one) of negotiations on the Action Plan Republic of Moldova - EU should have been held in mid-March. However, it was adjourned, fact that raised eyebrows among media outlets. They now speculate that negotiation process was stalled. Later on, British Embassy, after a meeting of a number of European diplomats with Moldovan Minister of Foreign Affairs, issued a press release saying "negotiations were not stalled /…/ At this stage, EU member countries and new members review negotiation outcomes with all neighbourhood countries involved in Enlarged Europe program so as to determine future actions. The main goal is to obtain clear and positive outcome in discussions on action plans, including for the Republic of Moldova".
The gist of this explanation has been confirmed by sources in Ministry of Foreign Affairs who expect negotiations to resume end of March or early next month. Afterwards, authorities would have to complete the action plan so as to submit it to Brussels by May.
National Co-ordinators of GUAM countries flew to Azerbaijan capital Baku for a meeting. Moldova was represented by Sergiu Stati, Deputy Minister of Foreign Affairs. According to RIA "Novosti" cited by "BASA-press", topping the agenda were streamlining GUUAM internal structure, enforcing agreements previously signed and regional co-operation.
V. Studies, analyses, comments
Fire on headquarters!
Igor Botan, 30 March 2004
Although oppositions' efforts in establishing a single electoral coalition do not inspire much confidence, this did not stop ruling party from engaging in a large-scale campaign aimed at denigrating and breaking it apart
Iurie Gotisan, 30 March 2004
The recent developments in the drought crisis make a price hike on bread quite inevitable. Definitely the skyrocketed prices would be presented as a phenomena affecting each one of us. Moreover, when it comes to food any slight increase in prices affects directly vulnerable strata especially the elderly