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Democracy and governing in Moldova
e-journal, year VII, issue 133, 15 February – 1 March 2009
Activity of Public Institutions
Studies, Analyses, Comments
Activity of Public Institutions
Decision concerning the distribution of state budget allocations for salary rise. An amount of 467 million lei is allocated for rises operable starting January 1, 2009.
Decision concerning the freshening of food wheat reserves and acquisition of 5th-class fodder wheat. In order to redress the situation in agriculture and sustain domestic agricultural producers, the Agency for Material Reserves, Public Procurements and Humanitarian Aid is empowered to release from the state material reserves 22,000 tons of food wheat for freshening (replacement) purpose and sell it at open auctions via the Universal Commodity Exchange of Moldova for an initial price of 1,600–1,800 lei per ton of food wheat. The agency jointly with the Ministry of Agriculture and Food Industry will ensure the recovery of food wheat stocks from the new crop by purchasing it from domestic agricultural producers, and will organise auctions to procure 5th-class fodder wheat from domestic agricultural producers for a maximum price of 1,100 lei a ton.
Decisions concerning allocation of funds:
- About 2 million lei is allocated to purchase and repair homes of some people hit by the summer 2008 flooding;
- More than 150,000 lei is allocated to the Government Apparatus and Ministry of Culture to cover expenses for the winter holidays reception offered by Moldova’s President;
- As much as 575,200 lei is allocated to renovate power networks of the State Archival Service.
1.2. Sittings. Decisions. Statements
Contentment with healthcare reform
Prime Minister Zinaida Greceanii has attended a meeting on reporting activity of the Republican Clinical Hospital (SCR) and said that the healthcare reform started in 2004 by introducing mandatory health insurance is being implemented well. Mrs. Greceanii indicated among persistent problems the effect of the disaster faced by the country when the reform was launched and effects of the global economic crisis. The prime minister informed about a project estimated at over 90 million Euros on capital renovation of SCR set to open this year.
The prime minister has attended a sitting of the college of National Social Insurance House (CNAS) and appreciated the work of CNAS in 2008, which ensured a good functioning of the entire social insurance system, payment of all social allowances to beneficiaries on time. At the same time, the prime minister stressed the importance of permanently improving the quality of CNAS services and its territorial subdivisions and demanded more cooperation with other competent state institutions and partners of social dialogue. According to a report by CNAS chair, the institution aims to build a flexible and modern system to meet all demands of beneficiaries of social rights.
Ceaseless fall in population
According to data by the National Bureau for Statistics, the preliminary number of stable population of Moldova was 3,567,500 people on January 1, 2009, compared with 3,570,100 people in 2008.
The Honour Order was awarded to Vasili Sakovici, Extraordinary and Plenipotentiary Ambassador of Belarus to Moldova.
Under a presidential decree, Deputy Interior Minister Valentin Zubic was awarded the police major-general ranking.
2.2. Sittings. Decisions. Statements
Increased attention to healthcare
Moldova’s president has attended a summing-up meeting with doctors and assured them of his support to modernise the medical system, as the medicine plays a very important role in "building the social state". On the other hand, Vladimir Voronin signalled some shortcomings in healthcare sector: the high percentage of domestic deaths; the imperfect information system of pharmaceutical sector; the necessity to modernise the social insurance system for disabled people.
The chief of state has participated in a cermony on opening of an automatic line to manufacture injection solutions in ampoules within the drug plant Farmaco SA; it is endowed with modern equipment capable to manufacture more than 3.15 million ampoules of 1–10 millilitres a month. The line will manufacture 36 kind of drugs demanded on domestic market, extend the sale market, enhance the output etc.
While on a visit to the Administrative-Territorial Unit Gagauzia, Moldova’s president has participated in the inauguration of a modern surgery block within the Ciadir-Lunga district hospital built accordingly to a pilot project elaborated in 2006.
1. Banking system
Crisis hits crediting…
Overall credits released by Moldovan banks in January dropped by 60 percent due to dearer loans and more exigency of banks to provide loans. Credits in Moldovan lei have decreased the most. NBM accounts reveal that overall loans in lei worth more than 510 million lei were threefold lower than the last month, when credits in domestic currency accounted for 1.62 billion lei.
This situation may be explained by several factors, but three of them could be most important:
- Firstly, it is very clear that commercial banks have hardened their credit requirements for both individuals and economic agents. This decision is based on some reasons:
- Inclusively potential consequences of the crisis on domestic banking system that experiences eventual shortage of liquidity;
- Value of unreimbursed loans on system is high, which means that credits contracted by businesses reached their maturity terms and they are not disbursed (in particular, in building sector);
- The decreasing deposits by individuals in banks (many contracts on deposits are cancelled upon their terms and they are not extended) – an important source of banks’ portfolio, and therefore banks provide less credits for personal needs.
- Secondly, individuals or businesses are more reticent and even worry to contract credits under these conditions, given the unstable monetary and currency markets, potential insolvency risks at reimbursement, and uncertainties of tomorrow;
- Thirdly, the reduction of the NBM reserve currency by more than 200 million dollars in one month may be regarded as an alarm signal for a beginning of "storm". This may have consequences both on depreciation of domestic currency and destabilisation of macroeconomic situation, risks which seem to occur this year and could produce a deficit of domestic currency. And the depreciation will finally affect those who contracted credits in foreign currency.
Banks holding international crediting lines or those which major share package is owned by European or international banks could enjoy a better condition, though western banks face the same problems.
Crediting standards were much more restrictive in January-February 2009, both for housing credits and consumer loans. Expectations in this respect have been generally confirmed. Last quarter of 2008 confirmed stricter requirements for mortgage credits, with banks anticipating this evolution in the mid-2008. The market conjuncture reveals that prices of homes are on the decline, marking an important and stronger correction than expected in the last quarter of 2008. As regards consumer loans, their growth rate has dropped more than expected by banks in late 2008, confirming a generalised population level trend and particularly the fall of consumer appetite.
Remittances equivalent to a Moldovan budget…
Maintaining remittance inflow would be a "life buoy" for the banking in particular and economy in general. However, remittances could decrease in connection with massive personnel reduction, with Moldovan nationals working abroad being affected too, and first signals are already observed – workers in building sector in Russia, in particular, Moscow.
The central role of emigration is economically proved for Moldova, as more than 20 percent of employable resources work abroad and remittances by migrant workers were equivalent to 1/3 of GDP in 2008. Indeed, they were worth over 1.65 billion dollars, which is the equivalent to Moldova’s budget. In macroeconomic terms, remittances have fundamental implications on economic growth, balance of payments and labour market. The increased consumer demand in Moldova funded by remittances has enhanced the supply by domestic producers and this advantages the economy. But imports have increased in parallel, as the economy is incapable to meet such a diverse and big demand.
2. International rankings
Moldova ranked in the bottom of world welfare top…
A world welfare index carried out by Legatum Institute (Dubai) reveals that the state of public health is a key concern in Moldova. According to the index, 43 percent of the population say that they are dissatisfied with their personal health (the Gallup World Poll). The prevalence of HIV is among the highest in the region. Almost 20 percent of citizens smoke, and more than 10 percent are undernourished. Consequently, health-adjusted life expectancy is under 60 years, and the population is decreasing.
The index indicates the high education level and low unemployment rate among progresses made by Moldova. On the other hand, it notes that with an average income of less than 3,000 dollars, Moldova is the poorest country in Europe, and political instability and poor government effectiveness keep investors away, hampering economic growth. The public sector still plays a dominant role in the economy, and privatisation has been sluggish. It requires more than 20 procedures to start an enterprise, the non-salary cost of employing a worker is high, and restrictions on working hours are rigid.
Foreign investment faces hurdles from bureaucratic inefficiency and corruption. Consequently, total foreign direct investment stock barely exceeds 1.5 billion dollars. The development of a more open economy has been blocked by political tensions that, for example, have led to a drop in the country’s main export good, wine, to Russia, which is its chief target market. The growth of a more open economy is also hindered by problems of smuggling in the disputed Transnistria region. At around 2 percent of GDP, foreign aid dependency is higher than for any other European country. The outward migration rate of 34 percent is the highest in the region.
The Legatum Prosperity Index 2008 covering 104 countries ranked Moldova on the 83rd place between Honduras and Pakistan. The top is headed by Australia, Austria and Finland, while Yemen is ranked the last place. Moldova’s neighbours Romania and Ukraine were ranked the 47th and 68th places respectively. As regards the former Soviet area, a better life is enjoyed by Estonians (36th place), Latvians (46th). Kazakhstan is ranked the 56th place, Russia the 57th, Belarus the 78th, and Uzbekistan the 80th.
3. Labour market
According to NBS accounts, the average wage on national economy accounted for 2,555 lei in January 2009 and rose by 12.8 percent, compared with the similar period of 2008 (the real salary increased by 6.7 percent). Average wage in budgetary institutions amounted to 2,096 lei and non-budgetary sector to 2,834 lei (Table 1).
Table 1. Average wage, lei
|Sector||January 2009||January 2009|
compared with January 2008, %
|Agriculture, hunting and forestry||1260,0||21,7|
| Extractive industry||2638,8||-0,3|
| Processing industry||2738,6||8,8|
| Electricity and heating, gas and water||4522,1||15,6|
|Whole sale and retailing||2531,9||13,7|
|Hotels and restaurants||2162,6||7,1|
|Transport and communication||3335,7||-2,7|
|Healthcare and social assistance||2239,7||16,2|
|Other collective, social and personal services||2070,7||15,7|
| Entertainment, culture and sport||1841,8||17|
Efforts to resume negotiations
On February 25, 2009, Deputy Minister of Foreign Affairs and European Integration Valeriu Ostalep had a meeting with Ambassador Charalampos Christopoulos, special envoy of the OSCE Chairman-in-Office, who was on a working visit to Moldova. The two officials discussed the present stage of the Transnistria resolution process, stressing the necessity of sustained efforts to resume the "5+2" negotiations. The special envoy of the Greek OSCE Chairmanship confirmed the OSCE support for Moldovan initiatives aimed to settle the Transnistrian conflict. The Greek official reiterated the importance of further promoting confidence-building actions between the two banks of the Dniester, stressing that the final resolution of the conflict may be agreed in the "5+2" format on the basis of respect for sovereignty and territorial integrity of the Republic of Moldova.
On February 26, 2009, Ambassador Charalampos Christopoulos met representatives of Transnistrian authorities in Tiraspol who said as follows:
- Tiraspol has proposed many resolutions throughout years, but Chisinau turned down all of them;
- The referendum conducted in the region in September 2006 revealed that people want to be closer to Russia, not Moldova;
- Replying to the law concerning the conflict resolution principles adopted by Moldova’s Parliament in July 2005, Transnistrian authorities have proposed a matching document to Moldovan leadership, in particular, to sign a friendship and good neighbourhood agreement that means to recognise the independence of the region;
- Transnistria insists on an equal footing for the conflicting sides, in accordance with the May 1997 Memorandum;
- The Republic of Moldova does not respect the 84 documents signed with Transnistria, of them 30 were signed with President Vladimir Voronin;
- The Republic of Moldova does not respect its international commitments since it has pledged to respect the clause of the 1997 Memorandum on Transnistria’s right to external economic activity when it was accepted in WTO;
- Important developments relating to the Transnistrian settlement are unlike before the April 5, 2009 parliamentary elections, as Moldovan authorities are looking for propagandistic brain waves rather than for solutions to the conflict;
- Tiraspol keeps trusting into cooperation with Russia and Smirnov, and it was recently discussed in Moscow, within the February 12 meeting between Smirnov and Lavrov, the implementation of the Zhukov-Smirnov economic assistance protocol signed in 2006, as well as Russia’s financial aid to Transnistria;
- Russia supports the "5+2" negotiations, but thinks that consultations in a "2+1" format are useful to elaborate solutions and propose them for discussions in the "5+2" format;
- Transnistria supports Russia’s peacekeeping mission and regards it successful.
Deputy Minister of Reintegration Ion Stavila and Ukrainian Ambassador to Moldova Sergei Pirozhkov have discussed Transnistria settlement aspects. The discussion had an informative purpose, with the sides informing each other about recent consultations on resolution process and actions to be taken soon. They stressed the importance of all consultations aimed at resuming the "5+2" negotiation process, within which to work out the special legal status of Transnistria by respecting the sovereignty and territorial integrity of the Republic of Moldova. In this context, they considered initiatives on development of Moldovan-Ukrainian cooperation within Euroregions aimed to help strengthening confidence and make appropriate conditions for the definitive settlement of the conflict. (According to MOLDPRES agency)
Impact of Russian foreign minister’s visit to Moldova
While on a visit to Moldova on February 23–24, 2009, Russian Foreign Minister Sergei Lavrov stated:
- The resolution of the Transnistrian conflict rests with Chisinau and Tiraspol;
- Russia is an active participation in the peacekeeping operation in security zone and guarantor of the conflict resolution;
- Russia will help building confidence between the parties by backing President Voronin’s initiatives;
- Russia welcomes the resumption of direct contacts between Vladimir Voronin and Igor Smirnov;
- A trilateral meeting with the participation of Russian President Dmitri Medvedev could be organised; that means "2+1" consultations;
- The "5+2" negotiations shall restart, as all parties involved (Russia, Ukraine, OSCE, U.S., EU and representatives of Chisinau and Tiraspol) recognise them. (According to MOLDPRES agency)
Interview between President Vladimir Voronin and Moscow-based newspaper Kommersant
The Moscow-based newspaper Kommersant has published an interview with Moldova’s president after the visit by Russian foreign minister to Chisinau. Vladimir Voronin confirmed that a trilateral meeting Medvedev-Voronin-Smirnov could take place in March to discuss the Transnistrian settlement. Voronin stressed that "5+2" is the only format for negotiations and the "2+1" meeting will be for consultation and communications could be consequently released to inform the public. Voronin was sceptical that Smirnov would accept to sign any declaration on necessity to respect the territorial integrity of Moldova. At the same time, President Voronin noted that, during the eventual meeting with his counterpart Medvedev, he would like to learn the opinion of the Russian leadership regarding the "package approach" accepted by OSCE, Ukraine, EU and U.S. Speaking about the forthcoming parliamentary elections in Moldova, President Voronin was confident that his Party of Communists (PCRM) will win an absolute or perhaps a constitutional majority. According to Voronin, PCRM would need a constitutional majority to modify the Constitution, so that to allow a definitive settlement of the Transnistrian conflict. Voronin stressed that he agreed with Minister Lavrov that, in the event of problems related to preparations for the meeting with President Medvedev, it would be better to organise it after the April 5 parliamentary elections.
Impact of economic crisis
The international economic crisis has a negative impact on Transnistria. In particular, just about 40 out of approximately 100 export enterprises in Transnistria keep working. The geography of exports has changed much. Earlier, 56 percent of supplies went to CIS and only 44 percent to the European Union. Now, 64 percent of exports go to EU and only 25 percent to CIS. The sudden fall of exports to CIS is linked to the serious depreciation of Russian rouble, by 30 percent, and Ukrainian hryvna, by about 60 percent. Hence, Transnistrian-made products worth 100 dollars exported to Russia and Ukraine compete with similar products made by local companies which cost 60–70 dollars. A number of enterprises have ceased their activity, in particular, the Ribnita-based cement plant and the Tiraspol-based household appliance manufacturer. Enterprises Litmas, Electromas and Tirotex have restarted working but very slowly. The Ribnita-based metallurgical plant uses 40 percent of manufacturing capacities. The highest unemployment rate is expected in the region in March. Under these conditions, Transnistrian speaker Evgheny Shevciuk has met the E.U. special representative to Moldova, Kalman Mizsei, to discuss possibilities to facilitate Transnistrian exports to EU.
Reactions to extended travel restrictions for Transnistrian leaders
The Transnistrian diplomacy has raised concern with the extended EU and U.S. travel restrictions on a number of Transnistrian officials. Transnistrian authorities claim that these practices are unjustified, while the EU and U.S. consider that Transnistrian leaders do not prove a sincere interest to settle the Transnistrian conflict, this being the main reason of travel restrictions. On the other hand, the Transnistrian side assures that it is interested in settling the conflict, accusing the Republic of Moldova of having adopted the July 2005 law with the purpose to obstruct the Transnistrian settlement. Therefore, it fears that EU and U.S. actions do not encourage confidence-building measures between the sides. Even more, Transnistrian authorities recall the U.S. and EU the way they have recognised the independence of Kosovo. They regard the travel restrictions on Transnistrian leaders as a pressure which has a contrary effect, as they cannot make their viewpoints loud. Definitively, Transnistrian authorities threatened the U.S. and EU that they will reply. The list of Transnistrian leaders restricted from entering the U.S. and EU, which Transnistria media compares with the "Schindler List" (?!), includes 19 officials headed by Igor Smirnov. Russian special envoy Valeriy Nesteruskin says that prohibitive actions cannot encourage the Chisinau-Tiraspol dialogue.
Humanitarian aid problems
Deputy Minister of Reintegration Ion Stavila was baffled with recent public statements delivered by the head of the International Organisation Doctors without Borders Mission, Mark Walsh, who said that people from the Transnistrian region get just a low percent of the humanitarian aid provided to Moldova. While meeting Mark Walsh, the Moldovan official described these accusations as biased and untrue. According to Stavila, the Government and foreign donors have provided humanitarian aid worth over 40 million dollars to residents of the Transnistrian region in the past two years. The aid included eyeglasses, prostheses, hearing devices, and wheelchairs for retirees and disabled people, material goods to remedy consequences of natural disasters, donations of equipment and drugs for health institutions from the left bank of the Dniester, etc. Stavila regretted artificial obstacles laid by Tiraspol structures, which harden the dissemination of Moldova’s humanitarian aid in the region for political reasons. He reiterated willingness of Chisinau authorities to keep promoting confidence-building and sustain people in the Transnistria settlement process. (According to MOLDPRES agency)
ECHR likely to award victory to Interdnestrcom
The Transnistrian media has reported that the ECHR could award victory to the Transnistrian telecommunication operator Interdnestrcom versus Moldovan Government, as the case is being studied. Some years ago, Interdnestrcom had bought a mobile telephony licence from Moldovan Government and paid one million dollars. Meanwhile, Moldovan authorities annulled the licence and refused to repay the money.
European Union will allocate 3 million Euros for free and fair parliamentary elections
The European Commission has decided to fund projects capable to promote and monitor respect for international standards during the April 5, 2009 parliamentary elections. For this purpose, it will allocate 3 million Euros via funding projects and instruments. Benita Ferrero-Waldner, Commissioner for External Relations and European Neighbourhood Policy, said that this decision of the European Commission is an important indicator of the active EU interest to deepen relations with Moldova. At the same time, the European official invited Moldovan authorities to do their best in order to strengthen the rule of law and implement all commitments on human rights and fundamental freedoms, especially throughout electoral process.
5th Meeting of EU-Moldova Subcommittee for Economy, Finance and Statistics
Chisinau hosted on February 27, 2009 the 5th Meeting of the EU-Moldova Cooperation Subcommittee for Economy, Finance and Statistics. The agenda included issues related to latest macroeconomic and financial developments in Moldova, implementation of economic commitments assumed by Moldova in accordance with the EU-Moldova Action Plan; implementation of the regulatory reform, etc. During talks, participants stressed the importance of EU support and financial assistance in internal reformation process, pointing out priorities and actions needed to be taken for strengthening the Moldovan-EU sectoral cooperation. (According to a MFAEI communication)
Visit by deputy foreign minister to Brussels
Valeriu Ostalep was on a working visit to Brussels on February 18, 2009 and met there Mr. John Kjaer, Unit Head, DG RELEX of the European Commission, and Mr. Janos Herman, Senior Adviser for Regional Cooperation, deputy political director, DG RELEX of the European Commission. Talks focussed on important issues for Moldova, in particular, the negotiation of a Moldova-EU Agreement, the EU visa policy and the opening of a dialogue on liberalisation of visa regime, the European Commission’s assistance to Moldova. As well, they discussed latest internal developments in Moldova and schedule of events organised jointly with the European Commission. (According to a MFAEI communication)
Republic of Moldova – Russia
During February 23–24, Russian Foreign Minister Sergei Lavrov was on a working visit to Chisinau. He was received by President Vladimir Voronin and discussed with Prime Minister Zinaida Greceanii and Deputy Foreign Minister Valeriu Ostalep. Talks focussed on international cooperation of countries, inclusively the information of Moldova about Russia’s initiative to work out a treaty on security, development of bilateral cooperation in some areas, particularly commercial-economic and cultural-humanitarian, Transnistrian problem; Moldova’s chairmanship in CIS. During the visit, the Russian foreign minister has attended the inauguration of the Russian Cultural Centre in Chisinau, signed a humanitarian cooperation programme between Moldova and Russia for 2009–2010 and a consultation plan between Foreign Ministries of Russia and Moldova for 2009, and handed in to President Voronin copies of archives relating to masterpiece and activity of Dimitrie and Antioh Cantemir.
Note by ADEPT: The visit of Sergei Lavrov came after a 8-year pause, when a Russian foreign minister visited Moldova last time, and in full electoral campaign. Thus, both Moldovan and Russian media, and opposition leaders said that the visit had an electoral purpose advantaging PCRM. Although the Russian foreign minister denied any electoral connotation of his visit, the fact that declared purposes of the visit were typical to a lower-ranking official rather than to Russia’s foreign minister reduces the credibility of Lavrov’s sayings.
Republic of Moldova – Council of Europe
On February 24, 2009, the European Court of Human Rights (ECHR) pronounced a decision on Decev vs. Moldova and decided on fair resolution of the case Dacia SRL vs. Moldova. In both cases the Court indicated violation of the right to property protection and fair trial. It granted 2,500 Euros in non-pecuniary damages and 800 Euros in costs and expenses in the Decev vs. Moldova case. As for Dacia SRL vs. Moldova, the Court obliged the Moldovan Government to return the Dacia hotel (including adjacent plot and inventory of the hotel) to the applicant. In the event it refuses to return the hotel, the Government will have to pay 7,237,700 Euros in pecuniary damages, 25,000 Euros in non-pecuniary damages and 6,000 Euros in costs and expenses to the applicant. (Source: www.echr.coe.int, www.lhr.md)
Republic of Moldova – OSCE
Launching of ODIHR parliamentary election observation mission
The mission of the OSCE Office for Democratic Institutions and Human Rights (ODIHR) was formally launched on February 26 to observe parliamentary elections in Moldova. OSCE observers are monitoring the scrutiny at the invitation of the Central Electoral Commission. The mission is made of 13 international experts. Twenty-four long-term observers will join them in early March and another 200 short-term observers will arrive before the Election Day. According to the head of the OSCE/ODIHR Election Observation Mission, Nikolai Vulchanov, the mission mandate is not to intervene in electoral process, not to recommend or advise Moldovan authorities how to organise elections, but to observe and notify facts, while the exclusive responsibility for validity of the scrutiny will rest with authorities, political parties and civil society. (According to Moldpres)
1 2 million Euros will be provided via the project Supporting Elections in the Republic of Moldova within the Stability Instrument; 0.5 million Euros will be allocated within the European Instrument for Democracy and Human Rights; another 0.5 million Euros will be granted via the Joint Programme of the European Commission and Council of Europe on Supporting Free and Fair Elections.
Studies, Analyses, Comments
Vote of Moldovans living abroad
Igor Botan, 23 February 2009
Claims by some electoral contestants to ensure the electoral right of Moldovan nationals working abroad are absolutely legitimate. Even more, it is worth to mention that ensuring the electoral right of Moldovan gastarbeiters is more legitimate than that sanctioned by laws, by Constitution and electoral legislation