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Activity of public institutions

Presidency
Government

The sociological portrait of new elect mayors by Igor Botan
The budget with many unknown variables by Anatolii Gudim

I. Activity of public institutions

1. Presidency

Independence Day

On 27 August 2003, Moldova celebrated the 12th anniversary of its independence. The celebrations included mass entertainment programmes, exhibitions, concerts of popular and pop music and a beer festival. The official part of celebrations saw depositions of flowers to the monuments to Stephen the Great and to the one to the soldiers who fought in the 1992 war in Transnistria, as well as an official reception given by President Voronin. During the reception, the President held the speech "We Want in Europe", in which he said that the European integration of Moldova is our best option for edifying a viable and prosperous state. At the same time, President Voronin stated that "European integration is in no way a geopolitical option, and it does not constitute a change of priorities in our foreign policy"; it is rather the shortest way towards transforming the country and connecting it to the global processes, as well as "the most reliable mechanism of recovering our territorial integrity".

There was no news in Voronin's speech: the theme of European integration as a method of attaining territorial integrity and prosperity has been a leitmotif of all of his speeches lately. The importance of the speech, however, may not be underestimated, at least when one compares it with the speeches held by Voronin on the same occasion in 2001 and 2002: the comparison reveals the remarkable ideological evolution that the President has seen during his two years in office (see ADEPT Comment Republic of Moldova - the country of projects, concepts, strategies…).

The holiday "Our Language", which marks the consecration of the Romanian language as the state language and its reversal to the Latin script on 31 August 1989, was also celebrated through a series of cultural and artistic events throughout the country. Still, unlike the Independence Day, the official part of the celebrations this time was quite bleak, being almost ignored by the top Moldovan officials.

In the meantime, President Voronin received messages of congratulation on the occasion of Moldova's Independence Day from a number of heads of state and officials, including the UN Secretary General Kofi Anan, the US President George Bush, who mentioned in his message the considerable progress that Moldova has made in advancing democracy and in searching for a political resolution to the Transnistrian conflict, the Russian President Vladimir Putin, who referred to the "strategic partnership" that has been established between Russia and Moldova throughout years, etc. On the same day, President Voronin had a telephone conversation with the latter, reportedly on the Transnistrian topic. However, neither the Moldovan nor the Russian side published any more details about the conversation, and analysts have linked it to the visit of President Putin to Moldova planned for this November.

2. Government

Objectives

The newly appointed Minister of Economy Marian Lupu has published the objectives of his activity, which are directly derived from the policy of President Voronin and his team. Thus, among the first actions to be taken by the minister will be the organisational restructuring of the Ministry of Economy by the principle of functionality, the direct involvement of the ministry in the budget exercise for 2004, including in the elaboration of the economic policy on spending, and the recovery of the dialogue with the international financial organisation including with a view to get their support for the restructuring of Moldova's foreign debt. In addition, the ministry will determine the "rules of the game" for the activity of all economic fields to encourage a favourable business environment and attract local and foreign investments.

The 2004 budget

According to the schedule, on 25 August, the Ministry of Finances submitted to the Government the draft of the state budget for 2004. The budget for the next year is to have no deficit, and the revenues and, respectively, the spending will amount to 5 billion 285,8 million lei. The largest part of revenues will originate in excises, while the largest part of spending will be consumed for social programmes. Independent analysts have indicated a number of shortages in the draft, including with regard to the foreign debt service. The draft does provide for sources of serving according to the schedule the debt to international creditors, but not to the bilateral ones. Thus, it seems that the Government is assuming the risk of incapacity of payments given that the foreign funding to Moldova has been stopped, the revenues from privatisation will be low and the only source of funding remains to be the National Bank of Moldova. A more detailed discussion of the draft is included in the analytical part of this e-journal.

Foreign funding

The Minister of Finances Zinaida Grecianii has expressed confidence that the state budget for 2003 will be fully executed, even though the foreign funding to Moldova has been suspended. Minister Grecianii said the Moldovan Government counts on a number of non-reimbursable grants that it will try to obtain with the help of the IMF from foreign donors and countries such as the EU or the Dutch of Swedish governments.

Meanwhile, the Moldovan press has published some allegations whereby the IMF and the World Bank would not resume funding to Moldova until early 2005, when the ordinary parliamentary elections are scheduled, the main reason for having stopped financing Moldova being the inconsistency of policies of the current ruling party.

Such a decision, if it proves true, would not be unjustified, if one takes a closer look at the shifting position of the Moldovan Government with regard to the conditions put forward by the international funders. Thus, while the privatisation of winemaking factories, including the Cricova factory, has been one such condition, President Voronin has recently promulgated a law transforming the Cricova factory into state cultural patrimony and as such it is no longer liable for privatisation.

As incoherent has been the position of the Moldovan Government on the issue of resuming the inspection of Moldovan goods destined for exports before expedition, which has been another condition set by the IMF for granting credits to Moldova. We have reported earlier that in July 2003 the Parliament adopted in great rush the Law on Inspection before Expedition and the Government passed a corresponding decision. The inspection was to be resumed by the Swiss Company Societe Generale de Surveillance (SGS), with which the Government had signed a contract on the provision of such services during 2002-2004. The inspection was suspended in September 2002 after the Constitutional Court had ruled unconstitutional two Government decisions on inspection. After the Government has failed to obtain the funding from the IMF, however, it seems that it is not very keen to execute its own decision: to date the Government has not fixed a date for the resumption of inspection services and has not published the regulation on carrying out the inspection. Not even the visit to Chisinau of the Deputy Chairman of the SGS Victor Zemlicka and the talks that he had with the Moldovan authorities have determined the Government to adopt a clear-cut position on the issue.

Analysts have commented that the Government actions in the SGS case are yet another proof of the lack of vision and the double standards with which the Moldovan authorities operate in their relations with foreign funding organisations. The confusing signals that these are getting from Chisinau will only make the talks on the resumption of funding to be held this autumn more difficult and lengthier.

Strategy for Economic Growth and Poverty Reduction

The deadline set by the Government for 25 August for developing the improved variant of the draft Strategy for Economic Growth and Poverty Reduction was not met and the draft is still under development. According to the Deputy Minister of Economy, Veaceslav Afanasiev, who has been tasked with the development of the draft, the improved version will have a qualitatively new structure as compared to the previous draft, which was rejected by the World Bank in April because it lacked vision, did not set priorities in accordance with the mid-term expenditures and was not drafted in a participatory way. The new draft will eliminate those shortages and will set properly the priorities, include a comprehensive analysis of the level and profile of poverty in Moldova and bring the expenditures in line with the sources allotted for funding the project. In addition, the final draft will be subject to public debates in October and the Government will hold consultations with the civil society on it.

The Strategy is to become a framework paper based on which the foreign creditors will develop their strategies of assistance to Moldova over the next years. The Government expects to get at least US$200 million to implement the Strategy.

Debts

According to data released by the Department of Statistics, in 2000-2002, the internal state debt rose by 47.7%, and reached 2821,4 million lei. The debt has formed primarily as a result of contracting credits from the National Bank of Moldova and is expected to rise given that the Government will have to contract more credits from the National Bank since the foreign funding to Moldova has been stopped.

At the same time, the monthly report of the Department of Statistics has shown that the salary arrears are also on rise for the third moth consecutively, and reached 176.5 million lei by 1 august, which is 23.9 million lei more as compared to the previous month.

As alarming is the amount of Moldova's debts to the Russian Federation for natural gas, which, together with the penalties and fines for late payments, is currently estimated at around US$1 billion.

II. Transnistria

"Happy Anniversary!"

Between 31 August and 2 September the secessionist Transnistrian administration organised a series of events to celebrate the so-called "13th anniversary" of the non-recognised Transnistrian republic. On 2 September 1990, the extraordinary congress of Transnistrian deputies of all levels adopted a declaration of secession of the Transnistrian region from the Republic of Moldova. This historical event has been presented by the Transnistrian leaders as the first step that Transnistria took to assert itself on the international arena.

As usually, the celebrations this year were held with great pomposity, in the best of the Soviet traditions, and included depositions of flowers to the monument to military glory, a military parade and a liturgy by the Archbishop Iustinian of Tiraspol and Dubasari. The events were attended by representatives of other non-recognised state-like enclaves from the ex-Soviet area, but also Russian, Ukrainian and Belorussian officials who support the secessionist republic at the eastern borders of Moldova. In premiere, part of the events were broadcast online on the recently opened web site of the Transnistrian leader Igor Smirnov.

Many Moldovan and foreign journalists, who witnessed the celebrations in Tiraspol, have described their contents and format as additional evidence to the fact that at present Transnistria is part of Moldova only in legal terms and that, in fact, Transnistria has not been Moldovan since long as a political system and mentality that are completely different from the ones in the rest of Moldova have taken root there over the past decade.

The tone of the events, however, has been given by the inaugural speech that Igor Smirnov held on 31 August, in which he said that Transnistria has become a full fledged state and "an important factor in the European and world politics". The only acceptable political solution to the conflict, Smirnov said, is the institution of a "contractual federation between two states" with equal right, differently put, a confederation. This position was announced a bit earlier in a communique of Transnistria's official press agency Olvia-press, which read that "federalisation should in no way end Transnistria's statehood, on the contrary, it should conclude with the recognition of the Transnistrian republic as a rightful subject of international law". At the same time Smirnov declared that even though Transnistria does continue to participate in the negotiations on solving the conflict, it has not given up its efforts at international recognition. Smirnov also referred to the inefficiency of the current negotiation format and of the efforts at drafting a federal constitution and accused the mediators - Russia, Ukraine and the OSCE of siding up with Chisinau. He categorically ruled out any involvement of the European Union in a future peacekeeping mission to Transnistria and said that he had already sent a letter to the Russian President Putin requesting Russia to take over the command of such future mission.

Smirnov's trenchant statements have prompted a number of reactions both in Moldova and abroad. The Moldovan governmental newspaper Moldova Suverana (The Sovereign Moldova) has accused the official Tiraspol of taking contradictory positions in the negotiation process, which fact seriously endangers "the entire plan of resolving the conflict put forward by President Vladimir Voronin". Ion Creanga, the Head of the Moldovan delegation to the Joint Constitutional Commission, rejected categorically the idea of a "contractual" federation, which would only result in a de facto recognition of Transnistria and said that there is no alternative to the asymmetric form of federation.

Unlike the negative reactions of the Moldovan side, the reactions coming both from the Russian political circles and the Russian press have been ones of approval and support for Smirnov's statements. Thus, Serghei Baburin, the leader of "Rosisky Obshchenarodny Soiyuz", a non-formal union of Russian ultranationalist parties, said in an interview to the Transnistrian official press agency Olvia-press that recognising Transnistria is the best option, if not the only one to solve the issue. At the same time, the prestigious Russian daily Nezavisimaya Gazeta wrote on 3 September that the withdrawal of Russian troops from the Transnistrian region, which is a region of "traditional" Russian influence, is not really timely now, on the eve of parliamentary elections in Russia. Russia should therefore take geopolitical advantages from the time out created by the delay in the withdrawal of its army, including in order to prevent the involvement of the EU in the conflict resolution process in order to secure its influence in the region.

Another round of talks

Meanwhile, a new round of negotiations took place in Chisinau and Tiraspol on 4-5 September with the participation of the mediators and of the representatives of the conflicting parties. The negotiators heard reports by the Joint Constitutional Commission and economic experts, and continued the work on a final political resolution to the conflict. In a press conference held by the OSCE on 5 September, William Hill, the Head of the OSCE Mission to Moldova, expressed his confidence that the divergences between the two parties with regard to the form of the future federation are not irreconcilable and that a compromise solution on this issue is possible to reach. Hill expressed his satisfaction at the "slow but firm" activity of the Constitutional Commission, but at the same time admitted that the Commission will complete its mission, which is to draft the federal constitution, before the main political issues between the two sides are settled. In addition, Hill supported the idea of a future multinational mechanism of military guarantees under the aegis of the OSCE and reiterated his concern with regard to the delays in the process of evacuation of Russian military ammunition from Transnistria.

The process of withdrawal of Russian weaponry was blocked a month ago by the Tiraspol administration which has claimed from Russia compensations in form of cancelling an important part of its debts for the gas imported from Russia. In an interview to Basa-press news agency, William Hill said that Russia can determine the Transnistrians to stop obstructing the process of withdrawal of its ammunitions. Otherwise, the technical conditions needed to complete the process by the end of 2003, as Russia committed to do, are in place.

The civil society takes a stand

29 representatives of Moldovan mass media signed on 26 August a common statement on the resolution of the Transnistrian conflict, in which they reject the proposal to solve the conflict through the federalisation of Moldova believing that it will turn Moldova into a "Russian protectorate". The journalists deplore the support that this proposal has enjoyed with distinguished foreign diplomats, who are thus giving in to Russia's neo-colonial claims, and pledge for an EU peacemaking operation to be deployed in Transnistria before a political solution to the conflict is reached. Also, the journalists support the concept of "three Ds" - demilitarisation, decriminalisation and democratisation [of Transnistria], launched recently by a group of 15 Moldovan NGOs for solving the conflict, and call upon the Moldovan authorities to engage in an open and honest dialogue with the Moldovan civil society on the Transnistrian issue.

The statement by the 29 journalists completes the range of similar statements that have been made recently by a group of 15 NGOs, a group of Moldovan art and theatre personalities and a number of pro-European parties. Thus, a "consensus of the civil society" has been taking shape lately with regard to the current efforts at solving the Transnistrian conflict.

The OSCE statement of reply to the 29 journalists may thus be regarded as one prompted by the generally disapproving position of a wide section of the Moldovan civil society with regard to the OSCE's mediating efforts. OSCE has called the journalists' accusations as a distortion of the goal and substance of its efforts within the negotiation process, has committed to work further towards a "fair and just" solution to the conflict and has assured that its actions are fully supported by many states and international organisations, such as the US and the European Union.

Joint Constitutional Commission/Joint Control Commission

Both commissions held meetings on 19 august and both were affected by the tensions that have emerged lately between the two sides.

Thus, at the meeting of the Constitutional Commission on 19 August, the members of the Moldovan delegation condemned the publication by the Transnistrian side of its own draft of the federal constitution, despite the agreement that the two delegations had had to co-ordinate the publication of all statements and documents. The meeting on 19 August was already the third to discuss the chapter on fundamental rights and liberties. Although the principles of the Chapter have been agreed and a part of the articles of the chapter have been drafted, the members of the Commission still have not reached a consensus on the issue of citizenship: the Moldovan side has opted for common citizenship, while the Transnistrians insist on the recognition of the Transnistrian citizenship.

The meeting of the Joint Control Commission was affected, in its turn, by the conflict that appeared after the Transnistrian delegation to the Commission had demanded that the Moldovan police contingent from Bender (Tighina) be moved to Varnita. That demand was rejected categorically by Chisinau and the OSCE mission deplored it as "unilateral and ultimative". The conflict itself, though, was not discussed during the meeting, which focused on the issue of the transparency of the military equipment deployed in the security zone brought up by the Moldovan side. The meeting has not reached any agreement on the issue as the Transnistrians demanded full transparency of all military and paramilitary forces on the entire territory of Transnistria and Moldova on the right side of Nistru River in exchange for ensuring the transparency of its military equipment in the security zone.

A possible EU involvement in the resolution of the Transnistrian conflict

On 5 September, the EU Political and Security Committee debated the draft of a framework document on political, economic and military relations with Moldova. Although the contents of the discussion has not been made public yet, diplomatic sources have alleged that the EU has not yet reached a consensus on an eventual participation of EU troops in a peacemaking operation in Transnistria.

Earlier, the OSCE Chairman in Office, the Dutch Minister of Foreign Affairs Jaap de Hoop Scheffer, on a visit to Washington, raised the Transnistrian issue during his meetings with a number of American officials, including congressmen, who he informed about OSCE's current efforts at reaching a political settlement. De Hoop Scheffer also mentioned his initiative to prepare a peacemaking operation with the participation of the EU, which, following enlargement, will find itself in the near neighbourhood of the conflict zone. Minister de Hoop Scheffer assured the American officials that the US continued support for and participation in these efforts is of crucial importance. As important is that Russia observes the end of 2003 deadline for withdrawing its weaponry from Transnistria. This has been the first time when Minister de Hoop Scheffer discussed at official level his initiative to include the EU in a future peacemaking mission to Transnistria. Notably, the Netherlands will take over from Italy the Chairmanship of the Council of the European Union on 1 January 2004.

III. Foreign affairs

The Conception of European Integration

The Moldovan Ministry of Foreign Affairs has finished, according to schedule, the draft of the Conception of European Integration and submitted it to Prime Minister Tarlev. The draft will soon be sent to the Directorate of the Stability Pact for South Eastern Europe and the European Commission for expertise. Following these consultations with the European bodies on the draft, a Strategy on the European Integration of Moldova will be adopted and adopted by the Parliament.

The importance of this document has been assessed by President Voronin in his speech on Independence Day as "the major strategic document of our state, a document which is above all party manifestos and above all programmes of action of all branches of power". Under these circumstances, it is at least paradoxical the fact that the contents of the draft has not been published, not at least partially, although earlier the authorities had announced that they would subject it to public debates before adopting it.

Relations with Romania

During the annual meeting with the Romanian ambassadors and diplomats, the Romanian Prime Minister Adrain Nastase stated that at present Romania is not interested in signing a basic political treaty with Moldova since, under the current circumstances, such a treaty would lack substance and only repeat the "stereotypes contained in the pre-1989 agreements".

Despite Romania's efforts to have a positive approach to its relations with Moldova, these will not work as long as the Moldovan authorities do not get rid of the suspicions that they still breed towards Romania, said Nastase.

The basic political treaty between Moldova and Romania was drafted in April 2000, but due to a number of changes operated to it unilaterally by the Moldovan side, the signature and ratification procedure of the treaty was stopped.

Chairmanship of the Council of Europe

The Head of the Moldovan Foreign Service, Nicolae Dudau, in his capacity of Chairman in Office of the Committee of Ministers of the Council of Europe, had a meeting with His Highness, Rainer the 3rd, the Prince of Monaco, with whom he discussed the prospect of the Principality of Monaco joining the Council of Europe.

The Two also discussed bilateral relations between Moldova and Monaco, including the prospect of establishing diplomatic relations and that of Monaco granting Moldova technical and financial assistance for some rural tourism projects.

IV. Studies, analyses, comments

1. The sociological portrait of new elect mayors
by Igor Botan

Over the summer of 2003 the governmental media has written extensively about the problems being encountered by the local public administration bodies formed following the local general elections of 25 May 2003. Most of those problems have manifested as collateral effects of the revision of the public administration system and the territorial administrative organisation (whereby 10 counties were replaced by 33 districts). Thus, the accounts of a series of mayoralties have been blocked and there is a shortage of personnel to fulfil the tasks provided for by the new laws etc. Obviously, these problems prompted others, such as the ones related to the preparation of premises for the new school year and the preparation of communal service providers for the winter season, as well as other social problems.

These problems do not seem to be provisional ones. For example, the mayors of towns Cahul and Orhei, which are two important economic centres, have expressed their bewilderment at the extremely rigid requirements on the number of employees that are to be hired by mayoralties. The inadequate number of local public administration officers may affect the activity of mayoralties throughout the mayors' mandates. Curiously, both mayors who have expressed their public discontent have been elected on behalf of the ruling party, which has been claiming that the revision of the local public administration system has been well prepared.

Judging by all appearances, the personnel requirement is part of the Government efforts to avoid the criticism of those who have opposed the revision of the system of the public administration system arguing that increasing the number of mayors by 1/4 and that of second tier administrative entities (districts) thrice would lead to significant increases in the number of public officers and, hence, in the related expenditure. Thus, according to Government decisions, the personnel of village (commune) mayoralties is to comprise 4 to 13,5 items and that of town and municipality mayoralties, except municipalities Chisinau and Balti, between 8 and 26,5 entities. The personnel of the apparatus of a district chairman and its seven subdivisions will be composed of 60,5 to 83 items. These figures do indicate an increase in the number of public officers, although not big enough for the mayoralties to function normally.

During the meeting that President Vladimir Voronin had this summer with the representatives of the new leaders of districts, he asked them to observe the requirements for the structure of the leadership bodies of the territorial-administrative units. In this sense, the Parliament will vote on the draft amendments to the Code of administrative offences adopted on 9 July by the Government. The amendments provide for fines worth 70 to 100 minimum wages for the central and local budget institutions that will exceed the required number of personnel.

Another issue that is to be faced by the new mayors seems to be that of their political affiliation. Unfortunately, immediately after elections, within the analytical show Argumente (Arguments) on the National TV Station it was explicitly said that the new mayors elected on behalf of other parties than the ruling one might encounter serious problems upon the formation of budgets of the localities they represent. In fact, this seems to be not a purely local practice but rather one widely spread. For example, recently, the BBC radio broadcast a report about Romania saying that there too the mayors elected on behalf of the other parties than the ruling one are being discriminated against particularly when it comes to budget transfers.

It is possible that the issue of the political affiliation of mayors will cause misunderstandings in the mayor associations to which they belong. Presently, in Moldova there are at least seven mayor associations: the National League of Mayor Associations, the Federation of Local and Regional Powers, the Association of Mayors and Local Collectivises, the Association of Mayors from Gagauz Yeri, the Association of Women Mayors, the recently registered Social-Liberal Party Mayor Association, and the long ago established People's Christian Democratic Party Mayor Association.

Therefore, there is no surprise in the fact that the general assembly of the Association of Local and Regional Powers held on 9 August and attended by 310 mayors caused certain misunderstandings. The organisers said that the Association was an apolitical structure, that the meeting was "dictated by the changes that have occurred as a result of the reversal to the district administrative system", and that "the Association has always been a front line supporter of the local public administration reforms on principles of political equidistance, rationality and maintaining the social and political consensus in the society".

In reply, the leaders of other two mayor organisations launched on 11 August 2003 a statement criticising the organisers of the above meeting and accusing them of pretending to be the "only association of local powers in Moldova, who defends the interests of mayors " and of "serfdom and secrecy" because "they have failed to invite, at least out of decency, representatives of other similar organisations". The statement also says that the Association "had been re-created through the district executive committees, upon the direct instruction by the central Government". In their view, "an organisation founded by the Government may not claim to be defending local autonomy, because the effective and real defence of the interests of local authorities necessarily involves a series of indispensable conditions".

The arguments of the authors of the statement are very serious. First, the last plenary meeting of the ruling party, dedicated to the results of the recent local elections, was held under the generic " the vertical power axis has been built", from which it would follow that the authorities of local public administration are a subordinated link in the "vertical axis". This can be felt through "the administrative pressures and the political actions, exercised by the central Government over the local authorities, the imposition of the structure of personnel, from the bottom up, against which the mayors have protested and which runs counter to Article 6/1 of the European Charter of Local Autonomy, whereby the mayoralties are obliged to reduce their personnel and the number of services offered; Government involvement in the process of creation and re-creation of associations of elected officers conflicts with the spirit of local economy and, obviously, the recommendations made to the central authorities by the European Commission and the Council of Europe etc."

Under these circumstances, there emerges another series of questions. For example, how can the Association of Mayors and Local Collectivities claim that it is not apolitically affiliated if the very issue of the reversal of the local public administration reform has been in the past few years one of the hottest political issues in Moldova? How can it claim that it "has always been a front line supporter of the local public administration reforms", if the local public administration reform of 1999, carried out with the support of the Council of Europe and a series of donor countries, has been actually abolished, and a comeback to the old organisation of principles of functioning occurred? Should one infer from this that the Association has supported both the reform of the local public administration in 1999 and its abolishment in 2003?

Unfortunately, one can expect all these problems to have an important impact on the political struggle in Moldova. The thing is that one of the authors of the above statement, the leader of the Federation of Local and Regional Powers is no one else but the General Mayor of Chisinau, Serafim Urechean, who has recently become one of the co-Chairs of the recently constituted Alliance Moldova Noastra (Our Moldova) (AMN), which the ruling party called its "main political rival" during its last plenary meeting. Hence it is possible that the political struggle between the two parties could be also fought through the mayor organisations. It is worth noting here that according to the data of sociological polls, the mayoralties are the bodies of public administration enjoying one of the highest rating in terms of citizens' trust, over 50%, which is second highest rating after the president.

This is not an accidental thing. Mayors represent an elite category of the Moldovan society. First, the mayors are the only elected category of officers, who participate in a political act of major importance, such as the direct, absolute majority elections in single mandate districts. This is what distinguishes them from the deputies to Parliament and the councillors in local bodies of all levels who are elected almost in an anonymous way, on party lists, and even from the President who is elected indirectly by the Parliament. The same opinion polls have indicated that the absolute majority of citizens disapprove of the method of election of councillors, deputies and the President.

Hence, one can say that the method of election of mayors is strong evidence to their personal qualities. In this sense, there is a series of factors that make it likely that the mayors and their professional associations will cope with the issues and challenges they will be facing, obviously provided that the central administration observes the principles of local autonomy.

Positive expectations are also fuelled by the extremely positive sociological portrait of the new elect mayors. Firstly, it is worth noting that the average age of mayors is 47.5 years, which means they are experienced but still active enough to fulfil their plans. The average age is the lowest with the mayors elected on behalf of the Social Democratic Party and Social Liberal Party Bloc, and the highest, 48 years, is with those elected on behalf of the Communist Party.

The mayors' level of education is very high. Almost 26% of them have an educational background in agriculture and livestock engineering, 24% - in teaching, 19% - in engineering, 6% - in economics, 5% - in law, 4% - in medicine. Among them, there are also a few graduates in political sciences, journalism, military affairs etc. Less than 9% of the new mayors do not have a higher education background, but there is no doubt they have strong leadership skills since they won a fierce electoral battle in which one mayor seat was disputed by four candidates on average.

It is interesting to consider the occupations the new mayors had before their election. Firstly, it should be noted that 290 mayors were re-elected, which is 32.3% or almost a third of all mayors. If one takes into account the fact that another 11 interim mayors and 14 deputy mayors have been elected to mayor seats, almost 35% of the elected mayors are experienced in mayorship. Things look even better if one takes into account that 109 more new mayors (12%) used to serve in local public administration bodies before elections. Thus, about 47% of the new mayors have the necessary administrative experience to successfully fulfil their obligations. This is important because only 1% of the new mayors are graduates of specialised public administration institutions.

As important is the experience of the other half of mayors. 11% of them used to hold posts of directors, or worked in leadership bodies of joint stock associations and Ltds; 7% were employees of private enterprises; almost 10% held positions of leaders of peasant farms; 5% had gathered managerial experience as directors of schools and 6% had developed good communication skills as teachers. The social position of part of the new mayors before elections was: 7% - unemployed, 2% - doctors, 2% - pensioners, 1,3% - policemen, 1% - NGO leaders etc.

It is interesting to observe the representation of women in the mayor profession. Curiously, the percentage of women mayors is almost the same as the percentage of women deputies - almost 16% (right after the February 2001 parliamentary elections, 10% of deputies were women; however, this percentage changed as deputy deputies filled vacancies left open by leaving deputies). Of interest is the distribution of women mayors by political affiliation: the Social Democratic and Social Liberal Party Bloc - 21%; the Democratic Party (PD) - 19%; the Centrist Union - 18%; the Communist Party - 17%; independent candidates - 16%; People's Christian Democratic Party - 10%.

Notably, the sociological portrait of mayors elected on behalf of the ruling party is not very different from that of mayors from the opposition parties. From this point of view one can assume that the Communist Party's problem of shortage of qualified personnel has been solved, at least at the local level. The Communist Party has accomplished its task of promoting to local public administration bodies good professionals irrespective of whether these share or not the communist views. Nonetheless, there are indications that the communists' attraction has not been the strongest one. One can draw this conclusion if one observes the behaviour of 1/3 of those 290 re-elected mayors, who changed their political affiliation after their previous mandate. It seems that the Communist Party had most opportunities to attract non-communist former mayors. Statistical data show that the most prodigious in this sense has been the AMN. Apart from the mayors that were members of the AMN constituents, it has recruited about 1/3 of all mayors that migrated to other political parties or 1/6 of all re-elected mayors. The Communist Party has succeeded to attract an equal number of mayors, but in terms of percentage the AMN was twice more efficient than the communists. Obviously, the methods of attracting mayors differed. Easiest were to be converted the formerly independent mayors (elected in 1999), followed by the mayors of the Centrist Alliance, the Democratic Convention, the Party of Democratic Forces, People's Christian Democratic Party. The curious thing about it is that two former Party of Democratic Forces mayors migrated to the rival Communist Party.

As interesting is the case of the Mayor of Ungheni, Vitalie Vrabie, who has been recently elected Chairman of the Association of Mayors and Local Collectivities. He won his previous mandate as an independent candidate, and the current one as a candidate from the Communist Party. The curious thing is that on the eve of the electoral campaign the Court of Accounts verified the financial activity of Mr Vrabie, but made public the results of the control and the found irregularities only after his re-election. Obviously, things of this sort have prompted speculations about the methods that the communists used to attract successful mayors to its ranks. Those speculations do have a share of truth in them given the abusive practices of the Communist Party in the 2003 campaign described in the final OSCE Observation Report published on 14 August 2003.

Another curiosity is the fact that the percentage of mayor mandates by political party in the 256 new mayoralties is not much different from the average party rating nation-wide. Thus, it becomes obvious that the communist initiative to increase the number of mayoralties by 1/4 has practically yielded no additional political benefits. Formally, most benefited from this increase the party who had opposed most the reform, the People's Christian Democratic Party. For example, the Communist Party received 36% of the number of mandates in the new mayoralties, while the Christian Democrats received 55%. It is also interesting that the AMN got 18% of mayor seats in the new mayoralties, which is almost 3% less than their countrywide result. This result is significant as it shows that the influence of Serafim Urechean as the leader of the Federation of Local and Regional Powers and of the Alliance of Independents was not decisive for the final results for the simple reason that in those localities there were no mayors to have been affiliated with and hence eventually influenced by either.

The above statistical data show that the new mayors have the potential to successfully fulfil their functions provided that the central administration respects the local autonomy. However, the recent conflicts between the major Moldovan mayor organisations leave little place for optimism.

2. The budget with many unknown variables
by Anatolii Gudim

At the beginning of September the Government web site www.moldova.md published the draft of the state budget of the Republic of Moldova for 2004. This is a good example of "glasnost". Moreover, since this draft will be presented to the Parliament only in October and then legislators will discuss it, all of us who are now called "civil society" have the opportunity to take part in this process.

At first sight, the optimism of the 2004 budget is astounding. The budget is envisaged to entail no deficit. As before, it is remarkable for its "social orientation" - 38.7% of all expenditure will be directed to social assistance, healthcare, education, science and culture. Besides, 340 million MDL are envisaged for raising wages of budget workers. There is an intention to reduce the tax burden: income tax is planned to be cut down from 22% to 20%, social fund payments - from 29% to 27%. Agriculture is not forgotten either and 30 million MDL are allotted to form a fund to subsidise agricultural producers.

All this is to occur against the background of positive macroeconomic reference points of the next year - 5.0% GDP growth, low inflation of 4.5% and a national currency exchange rate of 15,2 MDL per US$1.

The question that begs itself, though, is where could one get these revenues from? Most of them (65.0%) - as before - will be provided by VAT and excises. Non-fiscal revenues are estimated at just 421,5 million MDL. Unlike in the budgets of European countries, land and real estate tax collections are quite paltry - only 4.2%. Moreover, the Ministry of Finance hopes to obtain donor grants (289 million MDL) and the proceeds from privatisation are forecast at 304 million MDL.

Upon examination of the draft one has an involuntary feeling of compassion for its authors, the Government and, in the end, the country's overall life during the next year. It contains too many "unknown variables". The main questionable issues are the following:

• Will the country enjoy external financial support? Who will give money and how much? How are old debts to be paid? There are 371,9 million MDL (24,5 million USD) foreseen for these goals, which is three times less than the impending payments;

• How effective for rendering the economic activity more dynamic will the tax rate reduction turn out? Will it not destabilise budget revenues?

• Will it be possible to reduce the shadow economy (according to the Department of Statistics, it accounts for no less than 1/3 of the GDP), especially in its most significant "strongholds" - alcohol, tobacco, fuel, medicines, real estate and export-import operations?

• What will be possible to privatise? "Moldtelecom"? Northern electric power distribution networks? Wine factories? "Zorile" or "Viorica"? It was not possible this year;

• Do we still have to increase expenditures for maintaining the state apparatus? Shouldn't we still this year bring into effect Vasile Iovv's plan to reorganise the Government structure and functions? After all, the apparatus of some branch ministries "devours" more money per year than enterprises "under their jurisdiction" bring into the state budget! What state apparatus quality are we talking about when only 14 out of the 32 new raions (second tier administrative entities) have presented draft raion budgets to the Ministry of Finance on term (1 August 2003)?

• How can wages be raised when wage arrears are already estimated at 176,5 million MDL (12,7 million USD) having grown over the last month by 23,9 million MDL? What are the sources of funding (384,8 million MDL) for social compensations to some categories of the population (invalids, war veterans, families with many children etc.)? This year most of the means for such purposes have been provided by the European Commission, USAID and other donors.

Everything indicates that there have been difficulties in designing the draft. Its social orientation is due to poverty. Other countries make up "budgets of development", while we allot only 90 million MDL for investment (1.7% of expenditures!), 66 million MDL for scientific research (including 3,2 million MDL to the Academy of Sciences, which is less than the cost of maintaining some ministries).

The initial variant of the 2004 budget is an offspring of the Ministry of Finances. The participation of other state bodies, including the Ministry of Economy, has been minimal. It is interesting that the Ministry of Finances is found within the state budget structure in the honourable section 1 - "State Services of Special Destination", together with the Parliament, Presidential apparatus and State Chancellery of the Government, while the Ministry of Economy, as a poor relation, follows all branch ministries in the final section 19 - "Other Economic Activity Related Services".

In the meantime, one would expect the participation of the Ministry of Economy to be decisive during the elaboration of the philosophy and main allocations of the budget for 2004. For the sake of the cause, the Ministry of Finance that manages the technique of budget design and execution quite well does need a partner and an opponent.

To tell the truth, one should admit that it was the Ministry of Economy that placed itself in such a humiliating position. It was as early as spring this year when the Ministry (by 31 March, as co-ordinated with the IMF and WB) was to finish the work on the Economic Growth and Poverty Reduction Strategy for 2004-2006. In this case, the budget for 2004 would have been a tool to implement this strategy in the first year and would have been linked with the solution of key problems in this mid-term.

Since there is still no Economic Growth and Poverty Reduction Strategy (it is to be discussed with the civil society as promised in autumn) and the state budget for 2004 has been drafted separately, two paths of development are possible:

1. The Parliament will discuss and approve the budget quickly (and formally), aware of so many "unknown variables" that it will inevitably have to introduce multiple amendments during execution of the budget in 2004 (as in 2003).

2. Consideration of the budget will last till the end of the year and it will be already the 2004 Q1 when it will be approved. In this case, one would be able to discuss the realities and unclear positions of the budget with the autumn missions of the IMF, WB and other donors, and perhaps take more determined actions to launch the "second wave" of reforms in the country and the practical participation of the Republic of Moldova in the European integration processes.

Naturally, the second variant is more preferable. But its realisation requires the united creative work of the Parliament and Government, rather than the Ministry of Finances alone. One thing is clear: we are in for a very difficult financial year.

The paradox is that the country's threatening budget problems intensify against the background of the sprightly GDP growth rate: +2.1% in 2000, +6.1% in 2001, +7.2% in 2002 and no less than +7-8% in the current year. The forecast for 2004 of both the Government (+5.0%) and external experts (+4-5%) is still optimistic. No one is talking about default yet. Perhaps, in fact, we will make it once more and we will experience the viability of the old slogan "There are no such fortresses the Bolsheviks cannot storm" again?