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Activity of Public Institutions

Parliament
Government
Presidency

E.U. – Republic of Moldova Action Plan turns 3 by Igor Botan

Activity of Public Institutions

Parliament

1.1. Appointments. Dismissals

The Constitutional Court has validated the mandate of Communist Deputy Oleg Turea, the Nr. 72 candidate in the list of the Party of Communists of the Republic of Moldova (PCRM). Turea is a job teacher and he will be member to the commission for culture, science, education, youth, sports and mass media.

PCRM Deputy Vladimir Dragomir was appointed chairman of the permanent commission for culture, science, education, youth, sports and mass media and PCRM Deputy Petru Gozun was nominated deputy chairman of the same permanent commission.

Dumitru Godoroja, legislator on behalf of the Socialist Democratic Party of Moldova (SDPM), will be member to the legal commission for rules and immunities.

PCRM Deputy Nicolae Bondarciuc, chairman of the commission for economic policy, budget and finance, was elected member to the permanent bureau of the Parliament. He succeeded Victor Stepaniuc.

1.2. Legal acts

Law on meetings. The document was a drawback in the list of commitments that Moldova has assumed in front of the Council of Europe, as well as in the European Union – Moldova Action Plan. Under the new law, organisers will have to inform the local public administration regarding the place and hour of the meeting, while local public authorities will not have the right to decide on opportunity to hold meetings, but to recommend another place or hour of the meeting, and organisers will make the final decision. Possibilities of limiting some meetings in order to protect general and common interests of society are maintained.

Conduct Code of public functionary. The document establishes professional standards for the public service aimed to improve the quality of public services, ensure a better management of public interest, prevent and combat bureaucracy and corruption in public administration. All public functionaries must respect the conduct norms and those who breach them shall be reprimanded accordingly to the legislation on public service and labour legislation.

Commentary by ADEPT: According to experts, provisions of this draft shall be coordinated with stipulations of correlative drafts before promoting this law, in particular those concerning the prevention and combat of corruption; public function and status of public functionary; conflict of interests. The document contains ambiguous terms, it does not stipulate clear administrative procedures, and penalties for public functionaries are imperfectly regulated. Some regulations are capable to reduce the transparency of public authorities and they do not adequately oblige public functionaries to serve interests of citizens first of all.

Law on protection of brands. It regulates relations in the process of certification, legal protection and use of brands, creating this way the framework needed to enforce community regulations in the area.

Law on arbitration. It regulates the constitution, organisation and functioning of the arbitrage, an institution in charge with deciding on litigations related to civil law relations. The arbitration is an alternative way to settle litigations both by arbiters in charge with distinct cases (ad hoc arbitration) and permanent arbitration institutions.

Law on international trade arbitration. This law emerges from recognition of the international commercial arbitration as an alternative way to settle litigations on international trade.

Law on ratification (accession) to international acts on post:

• The 7^th Additional Protocol to the Constitution of the Universal Postal Union;
• The commitment on paid postal services;
• The Universal Postal Convention and Final Protocol;
• The General Regulations of the Universal Postal Union.

Decision declaring 2008 as the Year of Ion Druta. On occasion of the 80^th anniversary of the writer (on September 3, 2008), the Parliament has instructed the Government to work out and approve a programme on cultural-artistic actions dedicated to the Year of Ion Druta. The mass media is recommended to cover the events linked to the Year of Ion Druta.

Draft law on modification and completion of the Election Code. According to initiatives voted in the first reading, members to the Central Election Commission will have a 10-year minimum legal experience; the voting will be suspended for up to two weeks in the event of massive disorders or other unexpected circumstances.

Draft law on modification of Article 24 of the Law on Government. The document stipulates the dissolution of the Ministry of Industry and Infrastructure and takeover of its competences by the Ministry of Economy and Commerce. The amendments shall optimise the number of specialised central bodies of public administration and prevent doubling of functions between them.

Commentary by ADEPT: As regards the decision to dissolve the Ministry of Industry and Infrastructure, observers note that the new PCRM programme stipulates the "decisive introduction of post-industrial industry instead of agricultural economy and bureaucratic-nomenclature capitalism" as a priority in modernising Moldova.

1.3. Parliamentary control. Statements

Hearings. Motions

The parliamentary majority has turned down hearings demanded by the opposition, in particular:

• Hearing of representatives of law bodies and other central institutions participating in the pursuit of the independent media and opposition parties;
• Discussion of a motion seeking the dismissal of the minister of culture and tourism;
• Notification of the Parliament regarding actions by the executive, as the Russian Federation violates the international law and opens polling stations in Transnistria;
• Hearing of Government members regarding Moldova’s cases at the ECHR.

Questions. Interpellations

Deputy Speaker Iurie Rosca has asked the Government to report in which conditions the European Commission decided to lift the E.U. travel interdiction on alleged Transnistrian speaker Evgeni Shevchyuk. In another interpellation-statement, Rosca reiterated accusations from a previous declaration by the Christian Democratic faction brought against Vladimir Filat and LDPM, demanding operative investigation bodies to report the financiers of this political party.

Democratic Deputy Valentina Buliga has demanded information about functioning of technological machine stations, as the governance had actively promoted the opening of such stations but they are providing expensive services to farmers.

National Liberal Deputy Anatol Taranu has asked the Ministry of Foreign Affairs and European Integration to report the staff policy of Moldovan diplomacy, invoking the recent recalling of Moldova’s representative to the U.N. Alexei Tulbure.

Deputy Vladimir Filat has asked the Government to report measures taken to protect the private life since anybody interested may acquire technical interception devices.

Our Moldova Alliance (OMA) Deputy Gheorghe Susarenco demanded information about the Social Investment Fund of Moldova, collections by this structure and use of these amounts.

Igor Clipii has asked the Ministry of Information Development (MID) to provide information regarding biometrical passports, with the recent MID project being estimated at about 4.5 million dollars.

Oleg Serebrian holds information about disappearance of funds of the National Museum of Arts and demands competent authorities to make order in this sector. Also, Serebrian demands a list of prohibited food supplements.

Statements

Eighty-eight members of the Moldovan Parliament have adopted a declaration "concerning the unilateral declaration of Kosovo’s independence." They raised a deep concern with the adoption of the independence declaration by Kosovo province authorities on February 17. Moldovan lawmakers described the declaration of Kosovo’s independence as a grave violation of Serbia’s sovereignty and territorial integrity, international law, U.N. Statute, 1244 Resolution of the U.N. Security Council, and basic provisions of the Final Act of the Conference on Security and Cooperation in Europe.

Speaker of the Parliament has said while on a working visit to the National Agency for the Protection of Competition (NAPC) that the law on protection of competition does not correspond any longer to needs of this sector and a new legal act is necessary. He noted that the NAPC shall promote cogent policies and make participants in this sector respect competitive requirements and principles, while its work shall be transparent, consistent and balanced.

Note by ADEPT: NAPC was created in February 2007 after a long protraction and hesitation by authorities. The Law # 1103-XIV from 30.06.2000 concerning protection of competition stipulated the creation and functioning of this agency, but neither the Parliament nor central authorities made efforts to create it by the end of 2005, when many amendments and completions to the Law # 1103/2000 were adopted, saying that the law was not corresponding to requirements in the area, including international regulations and practices. Amendments have been finally adopted, but members of the agency have been nominated within more than one year and the first actions by NAPC members signalled shortcomings of legislation and conflicts between perceptions of the mode of enforcement of this law.

The faction representing the Christian Democratic People’s Party (CDPP) has released several statements:

• Concerning the demographic situation in Moldova. It raises concern with the decline of the number of people in connection with the massive exodus of population, decline of the birth rate and rise of the death rate, as well as rise of the number of divorces and decline of the number of marriages, which are almost equal. The CDPP recommends the Moldovan Parliament to adopt a complex of measures in order to stop the demographic collapse and remedy the situation;
• Concerning risk of degradation of democratic process in country following the use of "dirty money" for political purposes. The CDPP faction is concerned over appearance of a new political party led by Vladimir Filat, which aims to bribe local councillors of other parties. It demands the Interior Ministry, the Centre for the Struggle Against Economic Crimes and Corruption, the Information and Security Service and the Prosecutor’s Office to investigate financiers of Filat’s party and to stop the invasion of dirty money in politics, if needed be.

LDPM leader Vladimir Filat has read a statement concerning the CDPP assaults, denouncing any bribery of members of other parties and describing the CDPP assaults as an attempt to distort the attention of the public from own problems and to destroy democratic parties.

The OMA faction has released a statement concerning Moldova’s alienation from settlement of the Transnistrian conflict. It is indignant that initiatives by the opposition to organise parliamentary hearings on the Transnistrian conflict have been turned down. Also, it notes that there are forces in Moldova which will oppose attempts to undermine the statehood and sovereignty of the country promoted by the acting governance.

Government

2.1. Appointments. Dismissals

Constantin Mihailescu was revoked from the office of minister of ecology and natural resources for the "failure to fulfil his tasks in line with the legislation manifested through abuse of authority," according to a presidential decree. At the same time, Violeta Ivanov, deputy minister of ecology and natural resources, will succeed Mihailescu.

Commentary by ADEPT: Accordingly to constitutional norms and legislation, president of Moldova revokes and appoints Government members proposed by prime minister. It is worth to note that the GD # 204 from 25.02.2008 concerning activity of the Ministry of Ecology and Natural Resources in 2007 (published in OM # 45–46 from 04.03.2008) described the work of the ministry as satisfactory and therefore, the Government and prime minister had no objections against the work of the minister and they did not consider that he should be sanctioned.

Requested by the Ministry of Foreign Affairs and European Integration, the Government has recommended Moldovan president to recall Alexei Tulbure from the post of Permanent Representative of Moldova to the United Nations. The reasons of the early recalling are unknown, but this decision surprised the diplomat concerned. Tulbure was appointed to this office in July 2006 and he represented Moldova to the Council of Europe until then.

2.2. Decisions

Decision approving tariff quotas for commodity exports to E.U. Moldovan wine makers who will export to the E.U. within the Autonomous Trade Preferences regime will benefit by an export quota of up to 10 percent of the overall share of 600,000 litres proposed by E.U. This share will be also in effect for other sensible products for the E.U. domestic market, for which quantitative limits have been established: wheat, barley, corn, dairy, meat and meat products. Quotas for sugar and egg exports will be granted on the basis of the volume of production made by economic agent the precedent year and stored at the moment concerned. Producers holding E.U. commodity export contracts will be stimulated above all, with respect for quality requirements and authentication of the origin of goods.

Decision on opening of joint ventures (joint stock societies). The Government gives green light to a proposal by the foreign company MGL Business S.R.L. to found a joint stock society with state and private capital (Sport Agency), in which each side will control 50 percent of the registered capital. The Sport Agency will deposit as share to the registered capital a 1.7-hectare field in 12 Tighina Street in Chisinau municipality, which value will be established on the basis of a report by a licensed assessor. MGL Business S.R.L. will deposit currency as share to the registered capital of the joint stock society and it will be used to build the republican stadium.

Decisions approving some regulations:

• The regulation on reimbursement of the value-added tax;
• The regulation on acquisition of drugs for needs of the healthcare system;
• Framework regulation of territorial commissions in charge with the combat of trafficking in human beings.

Decisions approving programmes, concepts, strategies:

• The naval transportation development concept of Moldova;
• The concept on optimisation of the number of budgetary employees in 2008–2010. The document stipulates the dismissal of approximately 10,000 employees from education, healthcare, agriculture, interior bodies, and apparatuses of central and local public administrations, customs, fiscal services. Thus, salaries of the rest of employees will be increased (218 million lei shall be saved after the staff cut). According to the Ministry of Economy and Commerce, the personnel cut will not enhance the unemployment rate because some sectors lack labour force.

Decisions approving some draft laws:

• Concerning the modification of the salary law. The salary system in the real sector of national economy shall be liberalised, so that to enable employers to apply the tariff, non-tariff or joint system;
• Concerning improvement of financial condition of public service providers. It annuls debts in the amount of 35 million lei of I.S Moldtranselectro raised since 1999.

Decisions on allocation of funds:

• The Ministry of Culture and Tourism is allocated 580,000 lei from the Reserve Fund to inaugurate the Year of the Youth.

2.3. Sittings. Decisions. Statements

Implementation of the customs "one-stop-shop"

Prime minister has convoked functionaries in charge with implementation of the "one-stop-shop" in the customs system. According to officials of the policy coordination directorate of the Government Apparatus, the "one-stop-shop" principle has been implemented by internal customs stations Chisinau, Balti and Ungheni, so that the term of customs operations has been essentially reduced. The effective legislation shall be modified and adjusted at the second stage, in order to reduce the number of document control services. Premier Vasile Tarlev stressed that the implementation of the "one-stop-shop" is a progress in modernising the control at state border for the benefit of participants in traffic, and this will improve the image of the country through the "first impression" of a foreigner who enters Moldova. In this context, the premier instructed competent authorities to accelerate preparations for the implementation of "one-stop-shops" at customs stations, so that to be put into operation immediately after the adjustment of legislation.

Quality primary healthcare

Officials in charge with fortifying the technical-material basis of the primary healthcare service have reported measures taken to implement the 2008–17 healthcare development strategy and issue a list of primary medical-sanitary institutions which will be renovated, by one in every district (35 institutions). Prime Minister Vasile Tarlev stressed the opportunity of establishing priority actions aimed to modernise the healthcare system, as renovation and equipment works are very expensive.

Compact country proposal

It was noted at a February 26 sitting of the national committee for the monitoring of the elaboration of the Compact Programme that the country proposal has been elaborated strictly in accordance with the CPM requirements. It includes four projects on road renovation, enhanced efficiency of energy sector, transition to a modern agriculture and development of primary healthcare in rural areas. The estimated cost of the programme is 518 million dollars. CPM will amply verify and edit the Compact country proposal before negotiation and signing of the Compact.

Cooperation to protect competition

Decision makers and members of the National Agency for the Protection of Competition (NAPC) participating in a roundtable have sought a transparent and efficient cooperation mechanism to develop the entrepreneurship under a fair competition. They also noted the need of improving the legal-normative framework on protection of competition and regulation of monopolies. Just in the first year of work the NAPC has signalled the need to improve the legal framework in the area, especially as regards non-discrimination, transparency and fairness. Participants in the roundtable welcomed an initiative seeking the creation of an expert council of the agency, which would survey NAPC decisions in order to ensure a better dialogue with civil society. Prime minister told the roundtable that actions of the agency shall not affect the image of the country or diminish efforts aimed to build a favourable investment climate, and it shall monitor the formation of market prices of a number of products that influence economic developments and welfare of citizens.

Presidency

3.1. Decrees

Under a presidential decree, Alexei Tulbure was recalled as representative of Moldova to the U.N. and the reasons were not made public.

Moldovan president has awarded the Honoured Man medal to Mircea Surdu, editor-coordinator of the TV programme department of the public broadcaster Teleradio-Moldova.

3.2. Sittings. Decisions. Statements

Concerns with implementing some laws

Moldovan president has convoked a sitting on updating of the legislation regulating the adoption procedure, which discussed a draft law on legal status of adoption. It was noted the importance of making clear competences of authorities in charge with adoption, more strictly monitoring the child and family in the post-adoption period. Vladimir Voronin asked the Government to urgently finalise the draft law and a set of legal acts needed to efficiently enforce this law.

Commentary by ADEPT: The Parliamentary Assembly of the Council of Europe has recently debated a report on adoptions in European states, recommending the revision of restrictive and faulty regulations in this area.

The Presidency hosted on February 18 a new sitting on difficulties of implementing amendments to the law on entrepreneur’s patent. It studied the situation related to the implementation of the Law # 208-XVI from 07.07.2006 and the evolution of the state of things after previous talks. According to a report, many patent holders who fall under the incidence of the first two stages of implementation of the law concerned have met the law and changed their organisation form. At the same time, competent authorities have taken measures to facilitate the implementation of the third stage of the law, which will begin on January 1, 2009 and will cover most of patent holders. The chief of state reiterated the importance of implementing the law concerned, which aims to ensure equal conditions and a loyal competitive framework for all economic agents in domestic trade sector. Speaker of the Parliament said that majority of political forces represented in the Moldovan legislature, as well as extra-parliamentary parties have realised the need of implementing the Law # 208/2006. Vladimir Voronin demanded more decisive actions to stir up the dialogue between regulatory authorities and regulation subjects, including the Small Business Association, with the purpose to facilitate the law implementation mechanism. Also, the chief of state indicated the opportunity of continuing consultations on elaboration of amendments to the Law # 208/2006, in order to remedy difficulties related to implementation of the third stage of the law.

Actions dedicated to the Year of the Youth

On February 29, President Voronin addressed a ceremony which opened the Year of the Youth, assuring that youths are in the top of political agenda and explaining the difference between the Year of the Youth and other years. In particular, he promised that the number of state-funded seats in professional institutions will increase by 30 percent; financial assistance will be provided to develop 1,000 businesses of youths; the indemnity paid to young specialists who will accept jobs in rural areas will be increased (up to 50,000 lei for graduates from higher education, up to 40,000 lei for graduates from professional education); financial assistance will be provided for the housing of young families.

Moldova’s president visited the University called Higher Anthropologic School and met there students and professors.

While on a visit to the National College of Viticulture and Winemaking in Chisinau, Voronin was deeply concerned with the unsatisfactory technical-material basis of this institution and promised that the college will be renovated and modernised. Accordingly to Voronin’s indications, a special action plan will be implemented with the participation of the Ministry of Agriculture and Food Industry, Building and Territorial Development Agency, Agency for Land Relations and Cadastre.

Viennese forum in Chisinau

Moldovan president has attended the Viennese Economic Forum in Chisinau and noted radical changes in political, economic and social system of Moldova, affirmation of democratic norms and market nature of national economy. According to Voronin, Moldova respects investors much and its president does not know any case in the history of the independent Moldova when a serious foreign investor ceased its business and withdrew from the economic area.

Delivery of agricultural machines

On February 29 the chief of state attended a ceremony to deliver agricultural machines purchased as part of the 2KR Project financed by Japanese Government to beneficiaries. The lot includes 150 agricultural machines which will complete 29 new Technological Machine Stations (TMS). Voronin highly appreciated the 2KR Project, stressing the obligation of strictly respecting the commitments assumed by Moldovan side within the partnership with Japanese Government. It was noted that TMSs help ensuring farmers with more mechanised services, consolidating fields, implementing modern technologies. The opening of 178 TMSs until now helped consolidating more than 278,000 hectares of farm land and another 50 TMSs will open in 2008 to provide mechanised services in viticulture, fruit growing and irrigation sectors.

Talks on NIT

Moldovan president has stated the following during the periodical programme Talks With The President aired by the TV channel NIT:

• The "Five-Plus-Two" negotiations on Transnistrian conflict will restart soon, with mediators and observers being expected to discuss a package of documents which have been drafted and delivered to the sides;
• Negotiations are expected to be longer than usually, they could be held in Helsinki or Sankt-Petersburg, and they could be scheduled soon;
• European institutions have appreciated efforts to implement the E.U.-Moldova Action Plan until now, but they will make a final assessment on April 9;
• A document is being drafted to regulate E.U.-Moldova relations, and it could stipulate more concrete and clear stages;
• Moldova has implemented some planned actions in the process of advancement forward E.U., in particular, it was awarded a facilitated E.U. visa regime; signed the agreement on Autonomous Trade Preferences; the Common Visa Application Centre has opened in Chisinau;
• According to Voronin, Moldova will ensure the circulation of capital and the circulation of services, which are part of the four fundamental E.U. freedoms;
• The March 15-scheduled PCRM Congress will be open and transparent and it will be available on line for other countries;
• The new PCRM Programme is modern, covers at least 30 years and stipulates the European aspirations of the party;
• Moldova’s decision not to recognise the declaration on Kosovo’s independence from Serbia was linked both to the unsettled Transnistrian conflict and violation of the building principle of a country (ethnic instead of territorial). These two reasons prevail on Moldova’s possible relations with certain states which recognised Kosovo’s independence;
• Moldova wants good neighbourhood relations with Romania and previous disagreements shall be forgotten;
• Moldova has become an attractive country for investments due to liberal reforms in economy; struggle against corruption and crime, with investments growing up to 540 million dollars in 2007;
• The internal logic of privatisation was changed, so that to collect more revenues to the state budget from sale of public properties;
• The political opposition must demonstrate its capacity to work and resolve problems, manifesting themselves in localities they rule, etc.

Insufficiency of honorific titles

Vladimir Voronin has submitted a draft law to the Parliament which introduces the honorific titles Artist of People, Honoured Artist and Honoured Band by modifying the Law # 1123-XII from June 30, 1992 concerning state medals of the Republic of Moldova. The president considers that the present state award system does not provide enough possibilities to encourage personalities who have special merits to build cultural and artistic values, and there are no possibilities to morally stimulate artistic bands.

Commentary by ADEPT: Article 12 of the law on state awards stipulates four honorific titles of Moldova: Master Faur; Master of Literature; Master of Arts and Honoured Man. The law on medals has been modified five times during Voronin’s two mandates, in order to allow the awarding of legal functionaries and introduce new distinctions^[1]:

• The Honour Order;
• The Faith to the Homeland Order of three classes;
• The Nicolae Testemitanu Medal;
• Jubilee medals (the 60^th anniversary of liberation of Moldova from fascist occupation).

In late 2007 the Government (GD # 1363/2007) allocated 175,260 lei to the Moldovan president’s apparatus from the reserve fund to cover the cost of elaboration and manufacturing of state distinctions and items. Under the Government Decision # 305/2005, the Government Apparatus was allocated 615,734 lei from the reserve fund to manufacture columns for the Order of the Republic, straps for honorific titles and print citations for renovated distinctions.

Economic Policies

1. Inflation and prices

Price rise maintains high annual inflation rate…

According to official statistics, the inflation rate in January 2008 was 1.5 percent. Medium consumer prices of food products have increased by 2.8 percent, of public services by 2.5 percent, while prices of manufactured goods have decreased by 0.1 percent. Prices of food products, in particular, of fruits, vegetables, and meat, and partly of dairy have grown the most. Tariffs for communal services, particularly for natural gas, electricity, as well as other public services have advanced much. However, the consumer price index does not include all rises of electricity and natural gas prices, as they were operated on January 18. Thus, the real inflation rate for January could be higher. A similar rate is estimated for February, so that the inflation rate for the first two months would be around 3 percent.

The annual inflation rate has been under the influence of autumn price rises. The long drought, dearer energy agents, leeway macroeconomic climate^[1] and turbulences on international financial markets have directly influenced the inflation in the last 5 months of 2007. Prices of food products have increased by more than 6 percent in the period concerned (August-December 2007), while tariffs for services provided to population have advanced by about 10 percent. In fact, all these rises of prices and tariffs are part of the annual inflation rate afferent to January 2008.

Interesting: The annual inflation rate in Zimbabwe (Africa) reached a world record of 66212 percent (!) in 2007, hitting again the efforts of President Robert Mugabe to remedy the deep crisis faced by economy. Zimbabwe faces an extreme poverty, an 80-percent unemployment rate and a chronic reduction of food and fuel. For example, the monetary policy interest rate of the central bank of Zimbabwe is up to 1200% (it is 16 percent in Moldova).

2. Labour market

Salary aspects…

The medium salary on economy accounted for 2,266 lei in January, which is by 464 lei less than in December 2007 and by 263 lei more than the average wage for 2007. The medium salary in the budgetary sector decreased by 101 lei in January 2008, compared with December 2007, down to 1,731 lei, while the medium salary in the real sector was 2,570 lei. The highest average salary last January amounted to 5,280 lei and it was traditionally paid to employees of financial institutions, while the lowest wage was paid in agriculture – 1,035 lei, education – 1,495 lei, and the average pay in the healthcare and social assistance sectors was 1,927 lei. The average monthly salary on economy in 2007 accounted for 2,063 lei. This indicator was 1,625 lei in the budgetary sector and 2,292 lei in the real sector. The highest salary was paid in continuation in the financial sector (4,517 lei), and the lowest wage of 1,074 lei was paid in agriculture, which covers about 35 percent of the employed population. However, inflationist pressures in 2007 have affected the evolution of the real sector, which has grown by only 8 percent on average.

Diagram 1. Average salaries on sectors, % (2007)



Source: NBS

Some comments…

The internal macroeconomic instability, growth of inflation and prices, fluctuant exchange rate will have a negative impact on employees on labour market. The labour market will be more mobile and demands of workers will increase, in particular those seeking higher salaries, on background of the uncertain international economic climate which hits Moldova as well.

The relatively high turn-over faced by domestic employers, as well as the labour force migration to other countries are consequences of a "rocky" economy. In spite of a recently operated important salary rise, which will continue this year, this rise is artificial in fact. The rise of monthly earnings is uncertain because of the inflation growth, fluctuant exchange rate.

The shortage of qualified workers will be a problem in 2008, too, and building, textile sectors, hotels and restaurants, and financial-banking sector will have vacancies in continuation. At the same time, employees will face pressures in continuation, as the existing workers will be exploited at maximum because of the lack of qualified personnel and they will be more stressed and will hardly handle the professional tasks. Although the economic growth in the past years has apparently opened new jobs, the rate of persons employed after 2003 was negative; that means that the number of salary earners who withdraw from the labour market was higher than of those who joined it.

3. Currency

Remittances count for 1/3 of GDP in 2007…

According to data of the National Bank of Moldova, remittances accounted for about 1.22 billion dollars in 2007 and increased by more than 42 percent compared with 2006. As much as 918.75 million dollars or 75.5 percent of all remittances were transferred via rapid money transfer systems.

The ceaseless rise of remittances may be a consequence of the bigger number of citizens working abroad, their legalisation and rise of remuneration. According to experts, the volume of remittances is overrated and a new methodology should be used to calculate them. The NBM calculates the remittances on basis of the volume of private money transfers via banks and international money transfer systems (Western Union, MoneyGram, etc.). But not all bank transfers are remittances.

Transfers by emigrant workers in 2007 were equivalent to 1/3 of the GDP. According to recent reports, Moldova was ranked the 1^st-2^nd place in the world regarding the share of remittances by nationals working abroad in the GDP. Researches reveal that more than 80 percent of Moldovan emigrants send money to their families, and about 70 percent of them transfer more than half of their earnings. Remittances have fundamental implications on economic growth, balance of payments and labour market at macroeconomic level. They partly finance the trade deficit and encourage the rapid rise of salaries in certain sectors of national economy which already face a deficit of labour force.

Diagram 2. Evolution of remittances, annual rates in million dollars



Source: NBM

Transdnistrian Problem

Economic problems

• Transnistrian leader Igor Smirnov has met the deputy chairman of the Gazprom concern administration, Valery Golubev, and the head of the directorate for neighbouring countries, Anatoly Podmishalisky. The talks focussed on payment of Transnistria’s 1.6-billion-dollar debt for gas and imminence of increasing prices the next years, so that 1,000 cubic metres of gas shall cost 257 dollars by 2011. Updating gas tariffs for consumers in terms to approach them to gas acquisition prices of Gazprom, which went up to 192.75 dollars per 1,000 cubic metres, is a possible solution. Now the average gas supply price in Transnistria is 64 dollars per 1,000 cubic metres, with household consumers paying 50 dollars per 1,000 cubic metres and industrial enterprises paying 105 dollars per 1,000 cubic metres of gas. Smirnov sought the supply of gas to Transnistria in exchange for internal prices for the Russian Federation, noting that Russian industrial agents operating in the region, the metallurgical plant and cement factory in Ribnita and the Dubasari-based Power Plant pay in fact prices comparable with internal tariffs in Russia. He insisted again that Transnistria is obliged to buy gas from Gazprom in exchange for about 193 dollars and to sell them to Russian enterprises in exchange for approximately 105 dollars, but fell short of revealing the mechanisms and interests of these schemes.

Social problems

• Transnistrian unionists signal a ceaseless price rise and salary arrears. Salary arrears accounted for 107 million Transnistrian roubles (1 dollar is equivalent to approximately 8.5 roubles). A difficult situation is observed in the education sector, as teachers are paid their salaries with a 2–3-month delay. Salary arrears in the productive sector are also essential. Some enterprises have salary arrears worth 7–9,000 roubles for certain workers. But the healthcare sector is facing the worst situation. Estimating evolutions of prices and salaries, unionists note that a kilogram of grains was worth 1.5 roubles in 2007 while this price increased about 2.3-fold in the first months of 2008. Salaries have grown 1.2-fold. Thus, wages of health personnel are 2–3-fold lower (330–420 roubles) than the "minimum consumption basket". According to the newspaper "Novaya Gazeta", Transnistrian authorities are losing the confidence of citizens, as the regional legislation on salaries, their indexation accordingly to price rises is not respected. Tales of "grandfather Smirnov" and "unionist leader Sohin" about the higher price rise in Chisinau and Moscow do not impress people any longer.
• Transnistrian retirees who count for 134,000 people in the region also face problems related to budgetary shortcomings. The Transnistrian budget fails to finance the deficit of the pension fund in the amount of approximately 7 million (revenues in the 2008 pension fund account for 100 million dollars while expenses amount to 107 million dollars). The minimum pension in 2008 shall amount to about 32 dollars, which covers 46 percent of the minimum consumption basket. The medium pension including additions shall amount to approximately 65 dollars, which covers about 93 percent of the minimum consumption basket. In this context, the financing of the pension fund in the district of Dubasari was 1.5-fold lower than needed in February 2008. For this reason, retirees were paid in February 2008 an 85-rouble indemnity each, which is paid to all retirees starting January 1 from the 27-million-dollars humanitarian aid.
• Starting 2008, Transnistria annulled the facilities for students. Therefore, 5,282 out of 6,122 students of the Tiraspol-based University T.G. Shevcenko pay an education fee worth 530–750 dollars a year for daily attendance education and 200–700 dollars for non-attendance education. For comparison, education fees are 2–5-fold higher in Ukraine and 2–10-fold higher in Russia than in Transnistria. Students from large families pay 50 percent of the education fee. Students rated with a higher average mark than 4.5 (5 is the maximum mark) may be exempted from education fees, but 90 percent of them have to work in budgetary organisations or enterprises where they are assigned after graduation.
• The youth parliament held debates on military service: realities and prospects, in Tiraspol on February 22. Participants included among others the head of the Transnistrian Army General Staff, Vladimir Atamanyuk, who noted that accusations of irregular relations are wrong. He said that the Transnistrian region lacks funds to maintain a professional army. Recruits are often underdeveloped and cannot self-protect against hooligans from barracks. Thus, approximately half of young men must undergo profound medical tests every year immediately after being recruited. Some recruits have criminal records and inoculate the criminal ethics among soldiers. These negative factors superpose on decline of education rate, growth of alcohol and drug addiction among youths. All these factors fortify the trend of imitating actions from Hollywood movies and this explains the negative phenomena in the Transnistrian army and the fact that recruits face irregular relations. However, Atamaniuk was confident that the Transnistrian army is capable to get through eventual provocations.

Impact of Kosovo case on internal processes

• Transnistrian authorities have originally reacted to the declaration on Kosovo’s independence on February 17, 2008 and its recognition by a number of countries with the greatest international weight. They condemned the actions of the United States, describing them as a violation of basic norms of international law, in particular, of clauses of the Final Helsinki Act. In all likelihood, Transnistrian leaders envy Kosovo authorities who achieved what Transnistrian separatists have openly demanded in the past 18 years. Transnistrian leaders wanted to be the first to breach the international law, but they failed and now they pretend to protect the international law or demand a treatment like that received by Kosovo. As usually, Transnistrian leaders reiterated that the Transnistrian region has more rights to independence than Kosovo has.
• The Moldovan Government reacted on February 18 to the declaration on independence of Kosovo, releasing a statement to note that "though the Kosovo problem is unique in terms of composition, such a "settlement" formula is both a violation of Serbia’s territorial integrity and a serous destabilisation factor in Europe, a dangerous stimulant for the separatist environment in all conflicting regions." On February 22, the Parliament of Moldova adopted a statement raising disagreement and concern over this issue.
• Transnistrian leader Igor Smirnov has not been convoked in Moscow for consultations regarding eventual reactions to the declaration on Kosovo’s independence and its recognition by a number of states with the greatest international weight. In this situation, Transnistrian political forces focussed "to ensure the maximum integration of Transnistria into the Russian Federation," holding an international conference themed "Going ahead with Russia" on February 22. A strategic cooperation agreement between the Patriotic Party led by Oleg Smirnov, Republican Party headed by Vladimir Rileakov and People’s Will Party of Transnistria led by Oleg Gudimo was signed at the conference. The People’s Will Party is a branch of the nationalist party with the same name from Russia led by former deputy chairman of the State Duma Sergei Baburin. The agreement of the three pro-Smirnov parties is interpreted as a consolidation of forces to eventually compete with the Obnovlenye Party of the head of the Tiraspol legislature, Evgeny Shevchyuk, who is regarded the new favourite of Moscow who should replace Smirnov in an eventual conflict settlement process imposed by the Kremlin. But these are speculations for the time being. It is certain that Shevchyuk is developing tight relations with the major Russian ruling party Yedinnaya Rossia, while Smirnov and the three parties supporting him are affiliated to the secondary ruling party of Russia Spravedlivaya Rossia. It seems that Shevchyuk has got into favour with the European Union, which has recently decided to withdraw him from the list of persons who are restricted access to the E.U. Moldovan authorities decline their influence on this decision.
• The European Union Council adopted on February 25 the Common Position 2008/160/CFSP concerning restrictive measures against the leadership of the Transnistrian region. According to the document adopted under the auspices of Title V of the E.U. Treaty, "on February 27, 2003 the Council adopted the Common Position 2003/139/CFSP, renewed through the Common Position 2004/179/CFSP from February 23, 2004 which expires on February 27, 2008," accordingly to which member states shall take the necessary restrictive measures to prevent the entry into, or transit through their territories of the persons (Annex I)^[1] who are responsible for preventing progress in arriving a political settlement of the Transnistrian conflict and those obstructing and intimidating Latin script schools in Transnistria (Annex II)^[2]:

Efforts to restart negotiations

• On February 26 Valery Litskai, foreign minister of Transnistria, met Russian Deputy Foreign Minister Grigory Karasin in Moscow. They discussed ways to resume the Chisinau-Tiraspol negotiations. The sides stressed that the dialogue between the parties on an equal footing is a basic element to normalise the relations and settle the conflict. The Russian diplomat reiterated the inadmissibility of methods which run counter the international law such as the recent recognition of Kosovo by a number of states.
• President Voronin expressed optimism during a TV programme on February 29 that the "Five-Plus-Two" negotiations on settlement of the Transnistrian conflict will restart very soon after a two-year pause. Voronin noted that a package of documents has been elaborated and it was shared to mediators and observers and will ensure the settlement of the Transnistrian conflict. The president was confident that he has persuaded President Putin to accept a long negotiation session either in Sankt-Petersburg or in Helsinki. Also, President Voronin noted that the package of documents proposed to negotiators does not any contain provisions capable to violate the July 22, 2005 law on basic principles of status of the Transnistrian region of the Republic of Moldova. The package of documents refers to the status of Transnistria; necessary guarantees; withdrawal of weaponry from the region; withdrawal of the Russian military presence; civil peacekeeping mission. Voronin ruled out any deal with Russia. He assured that President Putin backs these approaches and, in the event they are approved by all participants, the documents will be delivered to heads of state and leadership of institutions participating in the "Five-Plus-Two" negotiations, in order to find a solution to the implementation mechanism. At the same time, the Parliament and the Government of the Republic of Moldova will look for a solution to the mechanisms of signing the documents. President Voronin hinted that this approach meets the agreement reached at a February 13 meeting between Russian and Ukrainian presidents and confirmed at the February 22 informal CIS summit.

Russian presidential elections in eastern districts of Moldova

• The Moldovan Parliament has refused to take an attitude towards the Russian presidential elections in eastern district of the country which are under the jurisdiction of the separatist regime. In turn, the Ministry of Foreign Affairs and European Integration has delivered a notification to the Russian Embassy in Chisinau, saying that the Russian presidential elections in Moldova may be held in the Russian Embassy in Chisinau only. In contrast, Georgia has vehemently protested against the opening of polling stations in the separatist enclaves of Abkhazia and South Ossetia like in Russia’s territory. In their turn, Russian authorities cited the Constitution of the country, which stipulates the right of Russian citizens to cast their ballots. At the same time, independent experts in Russia said that Russian citizens from Abkhazia, South Ossetia and Transnistria hold Russian passports, not identity cards. In these circumstances, Russian authorities should make a choice in order to be cogent and respect the legislation of their country: either to open polling stations in other countries with the consent of the latter and allow Russian citizens to vote with Russian passports, or if they open polling stations in foreign territories like in own country and ignore the protests of constitutional authorities, they should prohibit the voting on basis of Russian passports, accordingly to the Russian legislation.
• The chairman of the Transnistrian Central Electoral Commission, Pyotr Denisensko, has told the public that the Transnistrian administration and legislature control all procedures linked to the Russian presidential elections. Electoral procedures and propaganda meet the Russian legislation. Personnel of polling stations are mixed – there are representatives of the Russian Embassy and by three residents of the region. It should be mentioned that 23 polling stations have been opened in eastern districts of Moldova for the March 2, 2008 Russian presidential elections. The Transnistrian constituency is part of the Kaliningrad constituency.

Foreign Affairs

European integration

E.U. Council conclusions on relations with Moldova

On February 18, 2008 the General Affairs Council adopted its conclusions on relations of the European Union (E.U.) with the Republic of Moldova. The Council noted the positive dynamics in E.U.-Moldova relations over the past 12 months, underlined E.U. efforts to contribute to the conflict settlement in Transnistria and welcomed the active alignment by the Republic of Moldova with the Common Foreign Security Policy Declarations.

Also, the Council welcomed the progress made by the Republic of Moldova in the implementation of the E.U.-Moldova Action Plan (EUMAP) over the last three years. However, it noted that further and continuous efforts are needed in order to strengthen democracy and the rule of law, respect for human rights and fundamental freedoms, including the freedom of the media, inter alia in the run-up to the parliamentary elections, and to reinforce the fight against corruption, as well as to improve the investment climate, notably the investment-related provisions.

The Council reiterated that on the basis of sustained progress in Action Plan implementation, the E.U. is ready to start reflection on a new agreement with the Republic of Moldova going beyond the PCA. The Council conclusions are in dissonance with statements delivered by President Voronin during a TV programme aired by NIT, as the head of state was quoted by Moldpres as saying that a framework agreement between E.U. and Moldova is being drafted. He added that the future document will cover a longer period than the EUMAP does and could stipulate more concrete stages. The head of state could be right in the second case, but he is uninformed in the first case.

CAC

On April 1, 2008, Sweden will join the Common Application Centre (CAC) operating in the Hungarian Embassy in Chisinau. For this purpose, Swedish Foreign Minister Carl Bildt and Hungarian Ambassador to Moldova Mihaly Bayer signed an agreement in Chisinau on February 28, accordingly to which Sweden entrusts the Hungarian Government to issue Swedish visas to Moldovan citizens. Cyprus and Norway are negotiating the joining to the CAC.

Bilateral cooperation

Republic of Moldova – Russia

A meeting between Moldovan President Vladimir Voronin and his Russian counterpart Vladimir Putin was the key event in the register of Moldovan-Russian relations in the period concerned. Like after last Voronin-Putin meetings, the Moldovan presidential press service was very laconic in covering the February 21 meeting between the two heads of state. It said that the dignitaries have tackled issues related to commercial-economic cooperation between Moldova and Russia and the Transnistrian settlement process. In this context, the Russian president reiterated Moscow’s readiness to find a viable solution to the Transnistrian conflict jointly with Chisinau and Tiraspol. As regards the Transnistria settlement topic, the two presidents agreed on the need "to resume the "Five-Plus-Two" negotiations as soon as possible. Given the lack of details about the meeting between the two presidents, observers marked the field of suppositions and speculations.

The meeting between Russian and Moldovan presidents was preceded by a meeting between Russian and Moldovan prime ministers a day before. Official press services have been more generous as regards this meeting, reporting more details about talks. Prime ministers decided to work out a long-term economic cooperation programme until 2020 to succeed the bilateral programme in effect until late 2008, which helps intensifying the cooperation between Russian and Moldovan economic agents. The audience was told at a briefing after the meeting that Russia is interested to open a trade centre and a branch of the Russian VTB Bank in Chisinau, as well as to participate in petrol and gas deposit surveys in Moldova.

As regards humanitarian cooperation, the Russian side is ready to increase the number of scholarships for Moldovan students and to agree with Moldova on a new education cooperation programme for 2008–2009. In spite of optimistic plans on humanitarian area, Moldovan journalist Natalia Morari was restricted access to Russia for the second time in a row. The case of Natalia Morari, which has become chrestomatic for human rights organisations, was not discussed at the meetings between Moldovan and Russian presidents and premiers.

Speaking about the Transnistrian conflict, Russian Premier Viktor Zubkov has assured that Russia supports a political settlement on the basis of sovereignty and territorial integrity of Moldova. The deputy chairman of the Russian State Duma, Ivan Melnikov, reiterated Zubkov’s statement at a meeting with Moldovan premier.

Regional cooperation

Republic of Moldova – RCC/SPSEE

The Stability Pact for South Eastern Europe (SPSEE), a regional commitment launched in 1999 and joined by Moldova in June 2001, has ceased its activity. Duties and competences of SPSEE have been transferred to the Regional Cooperation Council (RCC) after a reorganisation process that began at a meeting of the SPSEE Roundtable in 2006. Sofia hosted on February 27, 2008 the first RCC meeting, which approved a Joint Declaration on RCC.

Minister of Foreign Affairs and European Integration Andrei Stratan represented Moldova at the Sofia meeting. He welcomed the reorganisation of SPSEE into RCC; stressed accomplishments by SPSEE as a mechanism of consolidation of regional cooperation and interface between countries in the region and E.U.; invited participants in RCC to assume new responsibilities in order to ensure security, stability and prosperity in the region, and encouraged the E.U. to continue participating actively in developments in the area.

SPSEE Special Coordinator Erhard Busek has visited Moldova before the Sofia RCC meeting, on occasion of the works of the Vienna Economic Forum. In Chisinau, he met Moldovan officials including President Vladimir Voronin, Prime Minister Vasile Tarlev, Minister of Foreign Affairs and European Integration Andrei Stratan. Moldovan officials eulogised the SPSEE, saying that it has helped Moldova approach the E.U. and indicated the personal contribution of Erhard Busek to strengthening the regional cooperation in the SPSEE-covered area.

Multilateral cooperation

Republic of Moldova – CIS

Moscow hosted an informal summit of the Commonwealth of Independent States (CIS) on February 22, 2008. Taking part in the summit were all heads of CIS member states, including Moldovan President Vladimir Voronin.

The summit focussed on an action plan on implementation of the CIS Development Concept. Participants also focussed among others on economic development, migration policy, modernisation of transportation infrastructure, cultural-humanitarian and information cooperation in the CIS area, etc.

Studies, Analyses, Comments

E.U. – Republic of Moldova Action Plan turns 3
Igor Botan, 29 February 2008

On February 22, 2008, the European Union – Republic of Moldova Action Plan (EUMAP) signed at the 7th Meeting of the Cooperation Council turned three. This is an occasion to sum up accomplishments and estimate prospects

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