With the early parliamentary election in the Republic of Moldova around the corner, the political and economic chatter is again focusing on the benefits for Chișinău. The matter has again sparked a polemic: would it be better for the Republic of Moldova to head east or west? A persistent question which Moldovan politicians have been juggling with for three decades, while Moldova remains one of Europe’s poorest and most corrupt countries, with one of the largest shares of population migration.
The campaign for the July 11 election makes no exception. Last week, the European Commission announced that over 2021-2024 it has allotted no less than 600 million Euro to the Republic of Moldova. The allocations will be spaced-out depending on Chișinău’s progress in terms of development programs and state reforms.
A few days after the news made headlines, the deputy director general for Neighbourhood and Enlargement Negotiations, Katarína Mathernová, told a press conference held on June 4 jointly with Moldova’s president, Maia Sandu, that the funds will be disbursed depending on the continuation of reforms, particularly in the fields of the judiciary, combating corruption and the investigation of the billion-dollar bank fraud of 2014, which to this day remains unsolved.
More specifically, the two officials explained the terms under which Chișinău is due to receive the funds, which account for some 6% of the Republic of Moldova’s GDP, tantamount to some 12 billion USD. The biggest allocation, worth 230 million Euro, is due to be used for the development of infrastructure, connecting Moldova to the European energy grid via Romania and in eco-friendly projects aimed at preserving the Dniester.
Another 220 million Euro is due to be invested in the management of public finance, while 100 million Euro will go to the development of SMEs and local communities. Last but not least, education and justice reform will get 25 million Euro each.
The money is part of a financial assistance package aimed at promoting investments with a view to boosting the economic recovery of the Republic of Moldova following the COVID-19 pandemic. The assistance will be provided in the form of loans and grants depending on the progress of reforms. In order to stop funnelling money to an inactive government without a clear propensity for reforms, as a temporary solution the EU changed its financing strategy for the Republic of Moldova. Starting 2018, the EU started funding local projects instead to sending the funds straight to the Government.
Still, it is clear Brussels wants first and foremost a pro-European majority in Parliament, matched by a Government with similar aspirations that should work together with Maia Sandu and her reform agenda. To that end, it has earmarked quite a considerable amount of money, which over the next three years alone will account for 60% of everything the EU has invested in the Republic of Moldova in the last decade, namely 1 billion Euro.
This capital injection might represent a turning point for the Republic of Moldova. More so, it could in turn lead to the disbursement of additional funds and boost the trust of foreign investors in a more predictable market, where their investments are safeguarded.
More to the point, this is the first financial assistance program the EU has devoted to any of the six states in the Eastern Partnership. Brussels could be providing similar programs to Kiev and Tbilisi in the near future, but for now, the Republic of Moldova is again “the privileged student” in Europe’s eastern vicinity.
The Russian Federation’s smokescreen
Moscow couldn’t stay indifferent to the EU’s bold move. While the European Union is willing to trade money for reforms, Russia too is trying to up its game in the Republic of Moldova, but rather at rhetorical level only. More precisely, one day after Brussels laid out its plans to disburse 600 million Euro to Chișinău authorities, Moscow too rekindled the idea of a loan to the Republic of Moldova. The idea was intensely advocated in the election campaign for the presidential election of 2020 by Igor Dodon and the Ion Chicu Cabinet.
Deputy Chair of the State Duma Committee for CIS affairs, Eurasian integration and relations with compatriots, Kazbek Taysaev, noted last Thursday that Moscow lawmakers are ready to grant the Republic of Moldova a loan, provided the country achieves internal political stability.
The notion of political stability at local level is one of the slogans of the Electoral Bloc of Communists and Socialists (BECS) in Chișinău for the current election campaign.
Taysaev made the announcement during a meeting with representatives of the Moldovan Diaspora in Russia, TASS reports.
Referring to the Russian official, media outlets in the Republic of Moldova write that he is a regular participant in internal negotiations in the Republic of Moldova left of the political spectrum. Furthermore, it was Taysaev who made possible the political alliance between the Communist Party in the Republic of Moldova (PCRM), led by Vladimir Voronin, and the Party of Socialists in the Republic of Moldova (PSRM), led by Igor Dodon.
Taysaev visited Chișinău days before the Electoral Bloc of Communists and Socialists (BECS) was officially launched.
This raises reasonable doubt over the involvement of the Russian official in this negotiation which seemed unlikely, due to the bitter relationship between Dodon and Voronin. The former stands accused of having betrayed his party after November, 2011, when the PCRM started to fall apart and many former communists switched to the Party of Socialists.
Upon meeting with representatives of the Moldovan community in Russia, Taysaev said Dodon was the architect behind the €200-million loan to Moldova in 2020. “Unfortunately, pro-Western politicians in Chișinău managed to undo the signing of the accord with the help of the Constitutional Court”, Taysaev went on to say.
In fact, the loan indeed fell through after a Constitutional Court ruling, and rightfully so. Several MPs of the pro-Western opposition signalled a series of provisions in the loan agreement which would have been very much detrimental to the Republic of Moldova. The loan agreement, rashly negotiated by Moldova’s former ambassador to Moscow, Andrei Neguță, a former adviser to president Dodon, contained a major trick hidden in Article 2, paragraph 2.
More specifically, the Republic of Moldova pledged to take over the debt of Moldovan companies (including some with Russian capital) that had taken out loans from Russian banks and turn them into public debt unless they were paid off within six months. A complex ruse that would have spelled economic disaster for the Republic of Moldova.
What the experts are saying: between scare tactics and empty promises
Political analyst and former deputy Foreign Minister, Valeriu Ostalep, told Veridica.ro that such promises about loans are quite commonplace ahead of an election, and that both parties employ such rhetorical ploys.
“In an election, everyone promises loans. This is neither the first, nor the last time when geopolitical actors try to win votes ahead of an election in the Republic of Moldova. I believe they keep trying particularly because they know it won’t make any difference. And this is because, in the case of this year’s election, people already know who they will be voting for, no matter the promises coming from either side.
Moscow can promise as much as it wants, even natural gas at one Leu per cubic meter, and still supporters of PAS would never vote for PSRM”, the analyst went on to say.
Nevertheless, Valeriu Ostalep expressed his reluctance with respect to a loan from Russia.
“In the current context, I don’t believe Russia will act on it. I doubt Moscow had a real plan of getting involved to that extent, before learning about the EU’s promises. I don’t rule out the possibility this is an effect of Dodon’s grievances, who seizes every chance he gets to speculate such issues and even makes up stories to scare Moscow. Just as the EU doesn’t see the whole picture in the Republic of Moldova, Moscow’s knowledge about the Republic of Moldova should not be overstated either”, the analyst also said.
Valeriu Ostalep believes this is an outbidding contest rather than an assistance per se.
“I doubt the EU has provided this type of assistance in its budget, that the amount has been set aside. I might expect the Union made good on its promise, but it all falls down on Chișinău’s capacity of putting the funds to good use. It’s a bidding contest. I believe the EU has conveyed a message, and Russia responded. Admittedly, both sides have sent out a signal, but I don’t see them having a particular impact on the voting process, and I believe voters have already made up their minds”, Valeriu Ostalep said.
The Moldovan analyst explained Dodon frequently employs scare tactics in Moscow in exchange for support or favours. In turn, Moscow’s promises remain purely rhetorical and entail no responsibility.
“More to the point, Dodon tries to scare Moscow about the involvement of foreign powers, saying that unless Moscow acts, NATO tanks will be entering the Republic of Moldova”, Ostalep argues.
Asked if Moscow still believes in this kind of stories, he answered: “I’d be inclined to say no, but there are still some who believe. And they are more comfortable that way. Still, I doubt this bloc has any serious political prospect. The Socialists have lost face and will disappear as a political faction rather soon. Sooner than some might expect”, Ostalep said.
In turn, political analyst and university professor Ion Tăbârță told Veridica.ro that a possible loan from Russia is nothing abut an election spoof.
“I doubt there is any real substance to Russia’s loan. It was just an announcement from a Russian official, who was probably asked by Russian strategists working for PSRM and Igor Dodon in the election campaign, to cut short the afterglow of the EU’s 600-million-Euro loan on voters, by making a counteroffer. It’s a clear case of political PR tactics, saying that the EU is offering this much, but so is Russia”, the political analyst explained.
Ion Tăbârță added that Moscow’s message bodes well with the Socialists’ own election slogan, “we’re not trading off our country to foreigners”.
“It’s a political smokescreen aimed at staving off the impact on pro-European voters of a pro-European Government willing to implement reforms. It’s just a move meant to counterbalance the EU’s offer”, Tăbârță concluded.
