print version

Activity of public institutions

Parliament
Presidency
Government

Shadow Economy as a Driving Force by Ion Olan
The Reform of Armed Forces of Moldova by Cristian Untila

I. Activity of public institutions

1. Parliament

Closing of the 2003 spring-summer session

On 31 July, the Parliament held the closing meeting of the 2003 spring-summer sessions, which heard reports by President Voronin, Prime Minister Tarlev and President of Parliament Ostapciuc.

In an overview of the Parliament activity during the spring-summer of 2003, Speaker Ostapciuc mentioned, among other things, the important role that the legislative body has played in "enhancing Moldova's position internationally" and in bringing closer Moldova's relations with various international bodies and institutions towards which the Parliament has fully fulfilled its commitments. At the same time, the Speaker criticised the Government for submitting few and poor quality draft laws to the Parliament. As critical was the Speaker of the attitude of the executive body to MPs' questions, to which the answers are always evasive. As non-constructive, according to Speaker Ostapciuc, has been the behaviour of the opposition deputies, who boycotted most of the current session and thus ignored those who entrusted them their votes. At the same time, Ostapciuc mentioned the close and fruitful co-operation that now exists between the Parliament and the President and which is due to the outstanding personality of President Voronin and is an important achievement of the current government.

Adopted laws

During the two week preceding the closing of the session, the Parliament adopted a series of changes likely to disturb the fragile balance achieved in the power-opposition relations. On 25 July the deputies adopted the Law on the Amendment of the Constitution of the Republic of Moldova, which has constitutionalised the special status of the Territorial Administrative Unit Gagauz Yeri and the rights of its authorities, including the right of the Gagauz People's Assembly to legislative initiative along with the MPs, the Government and the President. Practically, this law has inserted into the Constitution a number of provisions of the Law on the Special Legal Status of Gagauz Yeri adopted by the agrarian dominated Moldovan Parliament in late 1994. The adoption of these changes has been interpreted by analysts as the fulfilment of the electoral promises of the parliamentary majority towards the Gagauz authorities. Notably, the provision entitling Gagauz Yeri to self determination in the event of Moldova's loss of independence, initially introduced in the draft law, was removed from the adopted version.

Via the Law on the Safeguarding Tax on Sugar Imports, the Parliament has fixed an exceptional 40% tax on sugar imports applicable as of 1 August 2003. This provisional measure has been introduced to protect the sugar produced internally, which is about 50% more expensive than the imported one. It is for the first time since the Law on Antidumping, Compensatory and Safeguarding Measures has entered into force that the Moldovan Parliament has used it to protect local producers.

The Parliament also adopted a series of decisions on the system of prosecution bodies, including a decision on releasing the First Deputy General Prosecutor Anatol Plamadeala from his duties (no specific reasons have been given for this decision), and a decision on reforming the current structure of prosecution bodies. Although the latter amendment was commented negatively by a number of representatives of prosecution bodies, especially with regard to the abolishment of the prosecution bodies of appeal, the parliamentary majority went ahead with it without taking into account the opinions of those who would be affected directly by the changes.

Via the Law on Exempting from Taxes the Goods Delivered from Transnistria, a number of changes have been made to the Fiscal Code, whereby the deliveries of goods and services by businesses registered with the State Registration Chamber, resident in Moldova and fiscally non related to the Moldovan budgetary system will be exempted from the value added tax. The law was intended as a measure to eliminate barriers in the economic relations between businesses from the two banks of Nistru River. The law therefore bears a pronounced political character, yet its positive impact might be undermined by a number of factors that might surface upon application. These could be the non-observation of laws in the out-of-law Transnistrian territory or the lack of any means of control of the quality of delivered goods or their origin. In addition, the goods delivered from Transnistria might prove more competitive on the Moldovan market since their self-costs are much lower than in Moldova due to the lower labour cost and the Transnistrians' politics of attraction of investments and protection of some monopolists. These concerns were voiced during the debates of the law, but in the end the political rationales have prevailed over the economic ones and the law was adopted.

Via the Law on the Amendment of Pension Laws, the Parliament decided that the members of the Moldovan Parliament and Government would receive pensions in the same quantum as other categories of pensioners. The unification of pensions has been one of the requirements of the international financial bodies, and the failure by Parliament to adopt it has been one of the reasons that have prevented the resumption of foreign funding to Moldova.

2. Presidency

Political wrap-up

On 30 July 2003, the President Voronin held a press conference to wrap up the political developments of the first quarter of 2003. According to the President, the Transnistrian issue is still the major political and economic challenge facing Moldova, and the deadlock that the relations between Chisinau and Tiraspol are in at present is due to the policy of self isolation promoted by the Transnistrians and their desire to preserve the current status quo." Under these circumstances any discussion on the future mechanism of military guarantees is premature now; this will be possible only following the conclusion of a political document regulating the conflict, i.e. the new federal Constitution now in drafting. European integration is the priority of Moldova's domestic and foreign policies of the current government, and it requires concrete actions, such as the recent foundation of a Department for European Integration under the Moldovan Foreign Ministry.

Another occasion for conclusions has been the speech of the Moldovan President to the closing meeting of the 2003 parliamentary spring-summer session. The speech was presented in the governmental media as a political programme of the current government in which Voronin has put forward a number of clear objectives and benchmarks for achieving them. The President reiterated most of the points made earlier stating that "the objective of European integration and that of reintegrating the country are two sides of the same task" and that by 2007 Moldova is to become an associate member of the European Union. Achieving this objective will be the main task that the legislative body, and in particular the majority faction, will pursue in its future activity. In the view of the President, European integration may not be a "mechanical" process, reduced to the "deployment of some troops in Transnistria"; it is to involve a clear, well co-ordinated and detailed programme of actions that the President requested the Government and Parliament to develop.

Transnistria - the initiative of the OSCE Netherlands Chairman-in Office

The repercussions of the initiative launched in early July by the OSCE Netherlands CiO to send EU peacemaking troops to Transnistria were still felt in the activity of the Moldovan Presidency over the past two weeks. It is worth noting that the President refrained from publicly speaking on the subject up to the press conference on 30 July (in the meantime he only warned the meeting of Moldovan ambassadors in Chisinau not to let themselves influenced by certain foreign and local politicians who "intentionally overestimate" the military aspect of the Transnistrian conflict). The rhetoric about Moldova's European integration has nonetheless abounded during this time. As noteworthy are the signals that various parties interested in the resolution of the Transnistrian conflict have been sending to the Moldovan leaders.

Thus, at the beginning of the two weeks covered here, President Voronin received a telephone call from the Russian President Vladimir Putin. One's attention is drawn by the difference of points that the official press communiques of the two presidencies have made with regard to the contents of the call. While the Moldova press release refers to Moldova's successes in stabilising the economic and political situation and mentions only briefly the Transnistrian issue, the Russian press release, issued one day later, refers to the "primary attention that the Two Presidents have given to the situations created around the process of Transnistrian conflict resolution at the beginning of the activity of the Joint Constitutional Commission (JCC)", whose activity the Russian side will fully support. Notably, this telephone talk took place following a number of statements by Russian officials who disapproved of the Dutch initiative to pass the peacekeeping operations in Transnistria under EU aegis.

It appears that the USA are also ready to support the JCC and its efforts at drafting a formula of "asymmetrical federation" Of this the President Voronin was assured by the Ambassador Rudolf V. Perina, US Special Negotiator for Conflicts in Eurasia, during a meeting last week. The American emissary stated that both the EU and the OSCE want the Transnistrian conundrum be resolved by the end of 2003. Perina made these statements following a number of meetings he had had in Brussels and Vienna at which many European officials showed concern with the protraction of the Russian troops withdrawal from the region and of the conflict resolution process itself. Although Perina found premature the talks on sending EU troops to the region due to the yet informal character of this proposal, he said that any future peacekeeping mission should hold an international mandate and include several nations.

In an address to the OSCE Permanent Council in Vienna, another US High Official, US Ambassador to the OSCE Stephan M. Minikes, reaffirmed US support for current Moldovan Government efforts at solving the conflict and drafting a new, federal constitution and restated US hopes that Russia will retreat its troops and weapons from Transnistria by the end of 2003.

The Civic Forum and the Conception of State National Policy of Moldova

On 25 July 2003, in Chisinau a number of non-governmental organisations gathered a National Forum intended to set up a model of civic co-operation between the two banks of Nistru River as a new way towards resolving the Transnistrian problem. In his address to the Forum, President Voronin stated that the Forum is a follow up of the dialogue between the government and the civil society initiated by the President a year ago through the Social Pact (see article Is a Social Pact Possible in Moldova?), and aims at the co-operation between the government and the civil society in achieving Moldova's major strategic goal - the reintegration of the country.

The key point in President's address, though, has been the presentation of the draft Conception of State National Policy of Moldova, which has been submitted to Parliament and published for public debates. The essence of the Conception is about "identifying the mechanisms for building a harmonious multiethnic society in Moldova" and its major objective is "to integrate and consolidate the single multicultural and multilingual people of the Republic of Moldova", which is the "political and juridical continuation of the multisecular process of continuous statehood of the Moldovan people".

Although the draft law is a juridical document, one that is to be adopted as organic law, its nature is undeniably political, and it abounds in such politically controversial notions and ideas such as the description of the majority people living in Moldova and of the language it speaks as "Moldovan". The document is also heavily flawed in juridical terms either, as has been found by the Venice Commission, which has subjected it to juridical review at the request of the Moldovan authorities. Among other things, the Commission has pointed to the confusion that arises between the status of official language (Moldovan) and the one of the language of inter-ethnical communication (Russian), the exaggerated emphasis put on the "interests and values of the state" which do not always coincide with the ones of the individual, the misrepresentation of the concept of "civic conciliation" which conflicts with the principle of pluralism in a democratic society.

As expected, the parliamentary and extra-parliamentary opposition parties have repeatedly criticised the President's initiative, which they regard as one likely to revive interethnic tensions and polarise the Moldovan society along ethnic lines. Likewise, the Conception is evidence to the unjustified tendency of the Moldovan government to artificially bring the issue of interethnic relations back into the public eye. In other analyses, both the Civic Forum and the draft of the Conception have been regarded as yet two other megainitiatives of the current government meant to distract the attention of the public opinion from the real problems of the society to which the former appears to have no clues. The president assessed some of these criticisms as produce of co-operation between the Moldovan opposition and the Transnistrians and a serious obstacle in the way of crafting a multinational state in Moldova to match its European aspirations.

3. Government

Relations with international financial bodies and donors

Last week, the Moldovan Government saw a wave of withdrawals of funding by international financial bodies and donors as a result of its failure to fully accomplish the assumed commitments and its inconsequent policies of taking certain formal measures as required and at the same going for populist measures against the principles of market economy.

Thus, the IMF will not unblock funding to Moldova this autumn as expected, because Moldova has not fulfilled all of its commitments as provided for in the Memorandum on Economic and Financial Policies signed with the IMF, including the introduction of the inspection before expedition and the elimination of certain restriction on exports of ferrous metal waste. The IMF will now re-evaluate the Country Development Strategy agreed in late 2000 to clarify the way in which the Moldovan state defines its role in the economy of the country, after which a new loan scheme for Moldova will be developed.

The World Bank neither will allocate the second SAC-III instalment, for the same reason of Moldova's failure to abide by its commitments, including the lack of progress in the privatisation of the wine making industry and the reduction of fees on electricity and gas. In addition, the US Agency for International Development (USAID) withdrew its grant offer worth US$ 1,86 million for the energy sector of Moldova. The USAID decision was prompted by the actions of the Moldovan Government that damage Moldova's image and credibility, such as the governmental decision to merge two autonomous agencies regulating the energy and communications fields and thus politically subordinate them.

While foreign funding has been blocked, which, according to some experts will not be resumed earlier than at least in one year, the Moldovan Government will not be able to restructure loans worth US$ 200 million via the Paris Club and will have to identify alternative sources to the budget to make up for the considerable amounts provided in the 2003 budget from donations.

II. Transnistria

Joint Constitutional Commission

The first two meetings of the Joint Constitutional Commission (JCC) took place in the past two weeks. At the 21 July meeting, the members of the JCC exchanged views on the structure of the new Constitution and talked about the chapter on human rights and liberties. The talks were resumed at the second JCC meeting on 29 July, but went as far as to agree on the structure of the said chapter, its contents to be discussed at subsequent meetings. Experts have noted the tendency of the JCC members to avoid litigious issues and postpone them for the next meeting. In the event of the chapter that is already being examined, such litigious issue might by the one of citizenship, as it is known that the Transnistrians will try to consecrate Transnistrian citizenship in the new Constitution. Under these circumstances, it is little likely that the JCC will conclude the draft of the federal Constitution by the end of 2003, according to the schedule.

Meanwhile, in Tiraspol a series of events took place to celebrate the 11th anniversary of the introduction of Russian peacemaking troops into the region. A declaration of the Joint Control Commission issued on the occasion stated that the peacemaking operation instituted in 1992 and joining Moldovan, Russian and Transnistrian troops has helped overcome the consequences of the war and stabilise the region. Earlier, both the administration in Kremlin and the Transnistrian one have disapproved of the recent initiative of the OSCE Netherlands CiO to pass the peacekeeping operations in Transnistria under the aegis of the EU. Ukraine, though, saluted in principles the initiative, but said it should be agreed by all participants in the conflict resolution process.

III. Foreign affairs

Meeting between Vladimir Voronin and Ion Iliescu

On 1 August 2003, President Voronin met with the Romanian President Ion Iliescu. Although the press service of the Moldovan Presidency had announced that the major object of discussions would be the signature of the Basic Political Treaty between Moldovan and Romania (drafted in 2000), the Two Presidents did not go rather than agree to revitalise the co-operation between intergovernmental commissions and take a series of joint actions to securitise the Moldovan-Romanian border. The Romanian side has found the Basic Political Treaty in its current version as unacceptable due to a number of changes made to it by the Moldovan side. And since a consensus on the Treaty is unlikely to be reached soon, the Romanian President suggested that it is replaced by some sort of bilateral agreements, as, for example, a joint declaration at the level of heads of state or a set of documents on the legal regime of the joint border.

Although the Two Presidents expressed hope that the meeting would mark the end of the deadlock that the Moldovan-Romanian relations had seen for some time following a number of mutually incriminating statements, the results of the meeting are less than modest. In addition, it is at least surprising that the subject of Moldova's objective of European integration was not discussed at any length; the support of Romania, which is a neighbour state and expects to join the EU in 2007, is not only logical but also absolutely necessary for achieving such an objective.

IV. Studies, analyses, comments

1. Shadow Economy as a Driving Force
by Ion Olan

Recently, the Department of Statistics and Sociology has announced that the share of shadow economy (SE) in Moldova is 31.6% to GDP, according to the "Measuring Unseen Economy" methodology recommended by the Organisation for Economic Co-operation and Development (OECD, Paris). Meanwhile, our statistics has been claiming this indicator to be no more than 14-17% right up till the end of the 90s. One third of the economy is "in shadow". Is this a lot or a little? It is normal, if compared to Europe. This is the level of Greece, Italy or Spain. In Scandinavia, Germany and Austria this "shadow" is smaller.

The problem, though, is that according to the unofficial estimates (based on employment, consumption of electric energy and cement, import of oil products and food, transportation volume), the share of informal economy in Moldova is much bigger - about half of the GDP.

And, involuntarily, it became apparent through the Government Decision "On results of the RM Government Report to the Parliament" No. 894 of 21 July 2003, in which the problems conditioned by natural disasters, shadow economy, smuggling are mentioned as top-priority" ¹ (italicised by I.O.).

As regards the level of negative impact upon the state budget, shadow economy is indeed like a natural disaster. But unlike drought or heavy showers, it is a handmade phenomenon.

It should be admitted, though, that at the beginning of the transition period the shadow economy played the role of a social shock-absorber and was a source of additional incomes for the population, workplaces, as well as cheap goods. Now, when the metastases of half-legal and criminalised shadow economy and corruption stroke the young state, they create evident barriers to attraction of investments and development of civilised forms of entrepreneurship. Shadow economy aggravates property differentiation of the population, exacerbates problem of poverty that the state will not be able to solve (even given high GDP growth rates), if the budget is replenished only by the legal sector of the economy and there is no efficient mechanism of entrepreneurial income redistribution.

The shadow economy is many-sided. It originates from imperfection of the legislation, labyrinths of regulatory bureaucracy, clannish business, "transparency" of customs borders and "benevolence" of tax bodies. Its effects are also many-sided: macroeconomic, budget, regional and social.

One can judge on the level of the shadow economy by the contrast between Moldova's 14% GDP growth over the last three years and the difficult situation of the country's budget, which lacks funds not only for investments and education, but also for daily social tasks.

Anyone know what the main, most profitable shadow economy goods are: oil products, food and alcohol, tobacco products, medicines; while the most "unobserved", unaccounted for by the statistics branches are trade (where shadow economy is 60%), constructions and transportation, restaurant business and real estate operations.

Shadow flows of oil products and alcohol are striking. Their increase over the last years is by implication also confirmed by the statistics. Thus, according to the RM energy balance, officially accounted import of liquid fuel to Moldova dropped from 1,5 million tons of conventional fuel in 1996 down to 577-645 thousand tons in the last years; alcohol - from 29,7 million USD in 1996 to 3,0 million USD. ²

But with all this going on in the oil products market capacity of Moldova is currently estimated at 1,0-1,2 million tons. The main consumer of oil products (gasoline and diesel fuel) is motor transport and real sector machinery. The number of registered motor vehicles in Moldova reached 900 thousand units, including 280 thousand cars, 15,2 thousand buses and minibuses, etc. Meanwhile, statistics states that oil products consumption of motor transport is just half as much of the mid-90's indicator (in agriculture it is less than a third). ³

One of the prerequisites for the shadow overflow of oil products from abroad has formed on the 1 April 2003, when TMR lowered excises for gasoline (40 USD per ton) and diesel fuels (20 USD per ton). In the Republic of Moldova these excises are set to 88,9 USD and 37,04 USD per ton respectively. As a rule, the measures taken to curtail the oil products smuggling have been scarce and yielded no practical results (marking of gasoline with special dyestuffs, creation of mobile tax stations on roads, control at gasoline stations, introduction of sales registers).

The shadow economy's regional aspect is mostly showing in the municipality of Chisinau and "Moldovan-Moldavian trade" with Transnistria. In Chisinau and its suburbs, real estate operations, different types of trade, pharmaceuticals and restaurant business are the most profitable and the least controllable. Obtaining construction permissions - town-planning certificates and authorisations - remains the most difficult problem for economic units. It takes up to 170 days and a minimum of 1 thousand USD to get all the necessary acts for building or commissioning a finished building.

In addition, the so-called "Transdnistria conflict" has become a large-scale business for both parties long ago. Transdnistrian import volumes are worth paying attention: in 2002 for instance they exceeded export by 206,2 million USD or 82.4% to the region's GDP, while this indicator in Moldova accounted only for 24.2%. Statistics records imports of specific goods in volumes that exceed the regional needs considerably (oil products, alcohol, cigarettes, sugar, cosmetics, medicines, etc.) and their subsequent re-export, to the Republic of Moldova primarily, whose share within the Transdnistria's "export" officially accounts for no less than 25%, while within the import to the region - only 7-8%. Substantial misbalance of Transdnistrian external trade and such countries as Ukraine and Belarus is also interesting: import in 2001, for example, exceeded export by 7,8 and 5,3 times respectively. Noteworthy is the fact that this excess is a new know-how of the latest time. Earlier, statistics recorded an inverse situation: in 1997, for instance, export of Transdnistrian goods to Ukraine was twice as much as import, to Belarus - 2,4 times more.

There are different "schemes" of "export" to the Republic of Moldova of goods previously imported to Transnistria or produced there. Most of them take advantage of gaps and "ambiguities" in legal documents of Moldova related to its economic relations with Transnistria. There has also developed a phenomenon of smuggling, which employs economic agents both from Moldova and Transnistria, as well as those of third countries.

How can the shadow economy be reduced? Should it be suppressed, fought or legalised? World Bank has recently carried out a research in Moldova "State Regulation Costs Assessment" in 13 areas of economic activity regulated by the state, which covered 630 enterprises of different legal forms, sectors and localities. ⁴

The conclusion is obvious - an efficient government policy is necessary to reduce the shadow economy through:

• Raising efficiency of state bodies and reforming the state regulation system;
• Stimulation of legal business, support of small and medium entrepreneurship and creation of a favourable regime for this sector;
• Creation of stimuli for legalisation of the shadow capitals, strengthening the protection of property and entrepreneurs;
• Forced suppression of the illicit shadow economy, smuggling and criminal drugs and human trafficking in particular.

All these actions have to be taken on the background of purposeful and consequent market reforms given the concurrent strengthening of legal and financial state control over the economy. And the main thing to remember is: shadow economy must not be considered a natural disaster!

2. The Reform of Armed Forces of Moldova
by Cristian Untila

Recently the Parliament has adopted a series of normative acts on the armed forces. Thus, a decision on sending a contingent of Moldovan troops to Iraq was adopted, as well as one on reducing the effective of the National Army and of the Security and Information Service. These changes are part of the reform of the military and are meant to make the use of resources allocated for this purpose more efficient. Unlike before, during the past two years the issue of military forces has not been so much in the centre of the attention of the public opinion. However, this does not mean that there have been no changes within the system or that the attention of the authorities was as low.

On the contrary, certain analysts have stated that at present we are experiencing a growing militarisation not only of the force structures, but also of some organisations that are traditionally regarded as civilian. This happens through the promotion to command and administrative positions of individuals who have built a career in the army, police or security. The explanation for this phenomenon also lies in the very essence of the military system, which is about subordination to the hierarchically higher bodies. The supreme military command position is held by President Voronin, colonel in reserve and ex-minister of the interior.

Below we will make a brief retrospective analysis of the state of affairs in the field of military reform, take an overview of the previous and current relevant laws and single out a number of trends in the field.

I. Setting up the national armed forces

On 3 September 1991, the President of the Republic of Moldova Mircea Snegur issued Decree No.193 on the foundation of the Armed Forces of the Republic of Moldova. The decree was founded on Moldova's Declaration of Independence and was issued in order to safeguard the sovereignty and territorial integrity of Moldova.

Later, on 14 November 1991, the President of Moldova issued Decree No. 234, which declared Moldovan property the armament, military equipment and other military assets that belonged to the Soviet Army and were deployed on Moldovan soil at the time. The same decree banned the evacuation of military equipment and assets from the Moldovan territory. Since then, there has been a series of analyses about the fact that the decree on founding the national army and the one on claiming ownership over the military property and equipment of the USSR were issued within two months of each other, by which time most of the military resources were either evacuated or transferred to the left bank of Nistru, under the subordination of the 14th Army of USSR (later transferred under Russian command).

Also on 14 November 1991 was issued Decree No. 235 on passing over to the Moldovan jurisdiction the military units of the internal troops of the Ministry of Interior of the USSR, whereby the decree issued earlier providing for the withdrawal of those troops from the Moldovan territory was suspended.

In early 1992, when the confrontation with the secessionist authorities on the left bank of Nistru escalated into an armed one, a series of measures were taken to found a national army. This decision was primarily determined by the urge to make the army officers and sub-officers, citizens of Moldova, and the military in service, recruited from Moldova, to continue their military service in Moldova. A relevant decree was issued on 31 March 1992 providing for a series of measures related to the transportation of munitions to the republic and the creation of the conditions necessary for military service. The failure of the Government to keep its promises was deplored more than once, the social and living conditions of the military falling short of all expectation. Part of those invited to Moldova left for their old jobs and continued their career in the Russian Army.

It was only on 6 October 1995 that the President of Moldova issued Decree No. 322 on approving the military regulations of the Moldovan Armed Forces, which abolished all previous regulations of the USSR Army and adopted the Regulation on the Internal Service of the Moldovan Armed Forces, the Regulation on the Garrison and Guard Service of the Moldovan Army and the Regulation on Front Instructions of the Moldovan Army.

The military regulations of the Moldovan Armed forces apply on the military and the border guard troops of the Ministry of National Security, the carrabineer troops (internal troops) of the Ministry of Interior, the military of the Department for Civil Protection and Emergency Situations and the military of the Security Service of the President of Moldova.

The beginnings of the process of founding the national army saw frequent changes in the military command and even an open confrontation between the Minister of Defence (tacitly backed by the Government and Parliament) and the President. As a result, the latter issued a decree releasing the Minister of Defence from his duties. The decree was never executed as it was ruled unconstitutional by the Constitutional Court.

II. Legislation before 2001

As the National Army was being founded, the relevant legislation started being adopted.

Paradoxically, the first such law to have been adopted was the Law of 9 July 1991 on the Alternative Service, which established the method of replacing the military service with the alternative one, as well as the ways in which the latter may be fulfilled. The law aimed to ensure legal guarantees for serving one's civic duty towards the society without harming the individuals' freedom of though, conscience, religion or belief.

On 12 December 1991 was adopted the Law on the Carrabineer troops (internal troops) of the Ministry of Interior. The troops were intended to safeguard, together with the police or independently, the public order, the rights and freedoms of citizens, properties and the observation of laws. Since in the regular army the command was exercised mainly by former USSR personnel and officers of other nationalities, the internal troops were to become the main military force involved in the combat actions in Transnistria in early 1992.

On 17 March 1992, the Parliament adopted:

1. Law on Defence, which envisioned the foundations for the organisation and activity of the Moldovan defence sector, the prerogatives of the bodies of state power and state administration, as well as the obligations of citizens, decision-makers from enterprises, institutions and organisations with a view to fostering the defence capacity of Moldova.

2. Law on Military Forces, which provided that these forces were intended for the defence of the state in the event of armed aggression, as well as for ensuring the inviolability of the Moldovan borders and air space.

3. Law on the Military Obligation and the Military Service of the Moldovan Citizens provided for the ways to fulfil one's constitutional duty to prepare for the defence of the Motherland. The military duties envisioned:

• citizens' registration with the military and preparation for the military services (obligatory military training);
• fulfilling the obligatory military service and of the service in the reserve service of the Armed Forces;
• respecting the rules of military record keeping.

The obligatory military training was of 18 months.

4. Law on the Social and Legal Protection of the Military and the Members of their Families and of Citizens in Service provided for the norms of social and legal protection of the above groups, including the reserve military in training.

III. Conception of Military Reform

Soon after taking office, the second President of Moldova initiated a reform of the armed forces with the appointment to the position of Defence Ministry of some people close and hence loyal to the President yet completely inexperienced in field.

On 3 April 1997, though Decree no. 102, the Commission for the drafting and implementation of the Conception on the Reform of the Armed Forces was created. Head of the Commission was appointed the Supreme Commander of the Armed Forces himself. The Conception was supposed to be drafted within three months, but it took a few years before it was concluded.

On 26 July 2002 the Parliament adopted the Conception of Military Reform, which was a set of ideas, objectives, directions, principles, tasks and mechanisms to improve the system of military security of the state.

The military reform provided for a complex set of measures of political, economic, legal, military, technical military, social and of other character aimed to reorganise the system of bodies of the civilian and military command, the Armed Forces, the systems of mobilisation and military infrastructure according to existent circumstances and the geopolitical, socio-political and economic interests of the state.

The factors that prompted the reform were the following:

1. the faults in the current system of ensuring the military security of the state;
2. the adoption by the state of the status of permanent neutrality and the need to promote an adequate foreign policy;
3. the current geopolitical situation and the need to adapt to the new risks, threats, reality and missions;
4. the shortage of resources and means available and the need to adjust the mechanisms of the national security of the state to the actual possibilities and economic prospects of the state;
5. the relatively low quality state of the Armed Forces and the military potential of the state.

These shortages of the system of ensuring the national security of the state had led to the following:

1. the lack of some theoretical principles and practical experience in the field of military crafting and its command;
2. errors made in the process of enhancing the system;
3. neglect of the national values, the role and importance of the military establishment, the frequent misrepresentation of erred pacifist views as civic and patriotic values;
4. the negative impact of economic, political and socio-psychological crises on the military;
5. shortage of funds and means.

On 23 December 2002 the Government adopted a plan of actions to carry out the Conception, which included:

1. Scientific support for the national defence.
2. Developing and improving the legal framework on the military security of the state.
3. Enhancing the defence command system.
4. Reform of the Armed Forces (in particular, it is envisioned that the forces having the permanent capacity for intervention will be reorganised on principles of voluntary service and contracts starting 2014.
5. Improving the system of mobilisation.
6. The economic and financial support of the Armed Forces.
7. Developing international co-operation in the military field.

IV. Current legislation (adopted recently)

Between 2001 - 2003, a series of laws were adopted to carry out the stages of the military reform, including:

1. Decision of Parliament No. 247-XV of 15.06.2001 on creating a disciplinary unit of the armed forces.

2. Decision of Parliament No. 679-XV of 23.11.2001 on the approval of the general structure and the effective of the National Army and the institutions of the Defence Ministry. This law determined the effective of 7, 200 troops and 2, 400 civilian personnel (currently at less by 200 and 100 correspondingly).

3. Law No.1192-XV of 04.07.2002 on the Preparation and Mobilisation, which regulates the preparation for mobilisation and mobilisation itself, determines the competence and powers of the local public administrations, public institutions and the economic agents in the field.

4. Law No. 1244-XV of 18.07.2002 on the Reserve of the Armed Forces, which provides for the destination, ways of setting up and the structure of reserve forces, as well as the rights and guarantees for the military in reserve.

5. Law No. 1245-XV of 18.07.2002 on the Preparation of Citizens for the Defence of the Motherland provides for the conditions and methods of preparing the citizens of Moldova for the defence of the country (the law provides for a 12-months obligatory military service).

6. Law No. 1384-XV of 11.10.2002 on Procurements and Public Service Provision provides for the exceptional measures that the public authorities might take to obtain temporary concession of fixed or mobile assets by public institutions, economic agents and the citizens, as well as the measures whereby certain categories of citizens may be called to carry out certain works or activities of public interests or defence purposes.

7. Law No. 1477-XV of 22.11.2002 on the Material Responsibility of the Military provides for the circumstances and degree of material responsibility of the military on service and the military in reserve during mobilisation or training for damaging the military patrimony.

V. The technical and material basis of the armed forces

Keeping viable and efficient armed forces involves enormous budget spending that few states can afford. The small states usually benefit of aid from their military-political alliance partners, they reduce their forces and focus their efforts on keeping a small military contingent for safeguarding the constitutional order rather than ensuring the defence capacity of the state in the event of aggression.

The National Army of Moldova is no exception in this sense and the resources allocated to this structure are just enough to keep it in a more or less functional condition but not expand its military potential.

Below is a brief analysis of budget funds allocated between 1996 - 2003:

Year    Allocated amount (thousands lei)
1996    72 190
1997    69 500,0
1998    60 000,0
1999    50 000,0
2000    64 021,7
2001    87 743,8
2002    92 053,5
2003    148 234,4

Notably, apart from the direct funds, the Armed Forces receive aid, grants and other assistance from international donors.

The Defence Ministry may undertake certain income generating commercial activities. The distribution and spending of these incomes, regrettably, remain non-transparent, which fact has caused a series of political scandals involving top officials (for example the scandals around the commercialisation of a lot of MIG-29 planes and air defence equipment, the provision of services of services of transportation of weaponry to African states undergoing internal conflicts etc.)

To avoid such issues in the future, on 23 March 1999, the Parliament adopted the regulation on the method of commercialisation of the military equipment, weaponry and other technical military assets owned by the Moldovan Armed Forces.

On 30 July 2001 a list of National Army assets to be put up for sale was adopted. However, the list has never been made public, nor has the data on the commercialisation of the respective assets.

Thus, it is possible that soon problems will surface in relation to the sale of military patrimony, new internal, criminal and international cases will be opened, new parliamentary investigation committees will be created to look into the actions of their former fellows from parties, Parliament, Government, Presidency, ministries. The only measures such committees might take will be of stating and regretting financial damage to the state budget.

To sum up, we would like to argue that the military reform is not actually being implemented, since the legislative, normative and administrative changes made so far do not go to the roots of the problems experienced by the system. Preserving the obligatory military service and its gradual reduction as well as the cuts in the military effective do not help much to enhance the military capacity of our state.

The institution of the voluntary military service, on contractual basis, although costly, would prompt genuine interest for one to commit to a military career and thus result into mobile and functional armed forces able to solve the immediate tasks of safeguarding the security of the state.