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Activity of public institutions

Parliament
Government
Presidency

Challenges faced by the National Bank by Iurie Gotisan
When would elections be held? by Igor Botan

I. Activity of public institutions

1. Parliament

1.1. Legal acts

At the initiative of majority faction the Law on Modification of the Law on the Election of the President of the Republic of Moldova was adopted. Under the law "Parliament of the same legislature gets to elect the President only once, except for cases of the vacancy of the position (upon resignation, ousting, decease or impossibility to exercise the responsibilities)". The provision was not included in the amendments operated to Constitution in 2000 and the existing legal framework allowed the Parliament to elect the President at most 45 days prior to the expiration of the mandate of the President in office.

Previously, Christian-Democrats came up with a similar initiative thereby the elections of the President were to be held within two months of the expiration of the mandate of the President in office and that election results be confirmed via an organic law. The draft was rejected on the grounds that it would have allowed the extension of the Presidential mandate, and therefore might lead to conflict situations or political deadlock, in cases when the President being in conflict with the Parliament might refuse to promulgate the organic law confirming the election of the new President. Noteworthy, as long as appropriate amendments are not made to the Constitution, the law may be still abrogated.

Parliament also approved the Law on Ratification of International Legal Acts on Free Trade, namely between the Republic of Moldova and Macedonia, and Moldova and Serbia and Montenegro. The Agreements provide for trade liberalization, in particular: abolishing technical barriers, guaranteeing free transit; introducing and enforcing antidumping, safeguarding and compensation measures, applying WTO mechanisms for litigation.

One week later Parliament ratified a similar Free Trade Agreement with Albania.

Noteworthy, quite recently Republic of Moldova concluded the procedure of signing Free Trade Agreements with all the countries members to the Stability Pact for South-Eastern Europe: Bosnia and Herzegovina (December 23, 2002); Albania (November 13, 2003); Serbia and Montenegro (November 13, 2003); Macedonia (January 28, 2004); Croatia (February 22, 2004); Bulgaria (May 20, 2004). Free Trade Agreement with Romania was signed back in 1994 (February 15) and entered into force the same year. So far, Moldovan Parliament did not ratify the agreements with Bulgaria and Croatia.

Parliament passed the Law on the Modification of the Law on State Budget for 2004. Under the law, National Bank of Moldova shall provide a loan worth 50 million USD to service the foreign debt. The Government has used the money to buy back the debt on securities issued for Russian Gazprom, estimated at 115 million USD.

Via Resolution on designating a new member of the Observer Council of the Teleradio-Moldova public broadcaster Victor Osipov, Director of Electronic Press Association was appointed as a new member at the recommendation of opposition factions. He would replace Vasile Botnaru who resigned earlier on.

Last week Parliament passed the Law on the State of Emergency, Siege and War. The law outlines: terms, ways and conditions for declaring state of emergency, siege or war; competencies of the authorities declaring such a state; measures to be applied during such states; as well as the rights and responsibilities of legal and natural entities. During the state of emergency, war, or siege it shall be prohibited to amend the Constitution, adopt, modify or abrogate organic laws or electoral law, as well as conduct elections of the local or central government. Once the state of emergency, siege or war ends all the acts adopted during that time shall be abrogated without any previous notification.

Under the Law on Modification of the Law on Licensing more than 45 types of activities in various fields shall be subject to licensing. The law also stipulates that Licensing Chamber together with specialised local government bodies shall verify the compliance with the law no often than once a year. The law also outlines the grounds for withdrawing the license.

Also last week Parliament ratified the Protocol on the privileges and immunity of the Parliamentary Assembly of the Black Sea Economic Cooperation Organization. Under the document representatives of the member-states Parliaments shall enjoy certain privileges and immunity while exercising their mandate and travelling to the place of work, such as immunity from arrest or detention, immunity from any kind of trial based on the words spoken or written in their capacity as representatives of member-states, right to immigrate together with their family members to the member-states of the Black Sea Economic Cooperation Organization, which they visit or travel to while exercising their functions, etc.

(For further details on Parliament activity see http://www.e-democracy.md/en/comments/legislative/)

2. Government

2.1. Reshuffles

The last two weeks were rich in reshuffles as Government was very much displeased with the activity of certain government officials. Felix Virlan was ousted from the position of Deputy Minister of Energetics, while Valeriu Munteanu from the position of Director of the Migration Department. Several others government officials were sanctioned: Feodosia Furculita, Deputy Minister of Finance; Sergiu Sainciuc, Deputy Minister of Labour and Social Security; Anatol Dubrovschi, Deputy Minister of Education. The first two were blamed for delaying the draft Government resolution on salary supplements to the people of culture and sports; whereas the latter for the failure to enforce in due time Government motion on transferring sport schools into the property of the Department of Youth and Sports, as well as for "unreasonably lowering the amount allotted for the activity of the Olympia Sports Club".

2.2. Decisions

• On June 16 at the recommendation of the President, Government accepted to allot additional funds to the Central Electoral Commission worth 878,459 Lei. The amount, which in fact is much lower than the one requested by the Commission in the first place (1,775,512 lei), shall be used for "technical and material needs as well as to hire additional staff".

• Via a Government motion an Appendix to a previous decision of January 2004 was passed. The decision referred to the budget breakdown for official delegations thereby 320 lei per person are to be spent for a reception dinner, 380 lei for per diem, between 500 and 3,000 for souvenirs, 320 for visiting theatres and concert halls, 600 lei for the flowers at the greeting ceremony. In addition 5,000 lei are allotted for staples for the delegation, 3,500 for producing the badges and 1,500 for flower decorations in the meeting rooms.

• Following the initiative to amend the Law on Individual Privatization Plan of enterprises in the energy sector, Government decided to decrease the number of shares for sale of North Distribution Networks from 75% to 50% plus one. While taking the decision Government considered the experience of privatising Chisinau, Centre and South Electricity Distribution Networks, which in the eyes of the Government was "inefficient" as the state was deprived of the opportunity to control them. This is very illustrative of the authorities' reticence towards Spanish Union Fenosa and this despite the rhetoric of supporting and privileged treatment of the investors in Moldova.

  In fact this regulation might scare away some potential investors interested to buy large amounts of shares, at the same time some small investors would have a chance to bid due to the lower transaction price as a result of the smaller amount of shares available for sale. Another thing is that Government lowered the indicators of electricity generating capacity from 500MW to 200MW and it gave up the requirement for the potential investors to have experience in electricity distribution.

• Government also approved a draft law on the status of the military. The draft outlines the rights and obligations of the military, including benefits they would enjoy. A new element is that the draft acknowledges the equality of men and women in military service, which is an illustration of gender mainstreaming in Moldova.

• On June 23 Government entrusted the new Director General of the State Information Agency "Moldpres", Valeriu Renita, to take the necessary measures to streamline the organizational structure of the Agency and submit it to the Government within 10 days. The relevant Resolution also provides for transferring "Casa Presei" conference hall into the property of the Agency as well as allocation by the Government of 890 thousand lei to cover for the expenses of publishing and distributing additional issues of Official Monitor throughout 2002-2003.

• Government decided on the ratification of the Agreement signed on May 12 with WB on additional 5 million USD for continuing phase 1 of the Rural Investment and Services until 2005. The first phase was conducted in 2002 with 10,5 million USD allocated for businesses in rural area. 725 credits worth 126,6 million Lei were granted with the support of WB and other international donors which helped initiating about 900 businesses. The 5 million would allow another 300 businesses to be opened.

3. Presidency

3.1. Code on science and innovation

On June 15 during a session of the majority faction President Voronin presented the Code on Science and Innovation. In fact it was known back in March that such a draft is being developed when the President outlined the main objectives of the government regarding science reform during a meeting with institutions part of the Academy of Science of Moldova. In his presentation to the majority faction Vladimir Voronin reviewed the current state of science and innovation in the country and from there he talked about the tasks lying ahead:

1. establishing /…/ an innovation climate by creating juridical, fiscal and organizational incentives for those who are doing science, bolstering innovations and transfer of know-how";

2. establishing a social comfortable and dynamic social climate, thereby science, education and innovations would become prestigious, where dispersed professional resources would turn into an ever-growing intellectual capital";

3. establishing a new democratic administration culture, based on knowledge, openness and competence".

The Code is structured under 5 chapters and includes 166 articles. According to President Voronin it would be necessary to make appropriate changes to other codes, as it provides that all science and innovation institutions will be exempted from VAT, customs duties on the imported equipment necessary for conducting research. In addition, the draft provides for the accreditation of organizations working in the field of science and innovation, with private and non-governmental organizations being eligible as well. This would enable them to become associated members of the Academy of Science and apply under co-funding terms for the tender on public funds.

Another important provision is the establishment of the Agency for Protecting Intellectual Property by merging the Agency for Protecting Industrial Property and Copyright Agency.

The Code would acknowledge and strengthen the role of the Academy of Science, which shall become "the only public institution of national importance working in the field of science and innovation". In addition, all the scientific projects shall be exclusively funded via the Academy, for which purpose it would conclude a four-year Partnership Agreement with the Government.

3.2. Session with the Government

On June19, President Vladimir Voronin convened on a session Government members where he insisted on improving its activity. According to a press release issued by the Presidency, the President recommended Government members to pay more attention to: improving the quality of adopted decisions, better control their enforcement, eliminate personal and departmental interests when spending public money, improve cooperation between Government structures.

II. Transdnistrian conflict

1. High OSCE dignitaries visit Moldova

In June Chisinau hosted a series of visits by high OSCE officials. Thus, following the study visit on 9-12 June by 26 ambassadors accredited at the OSCE, Chisinau hosted on 17-18 June a delegation of the OSCE Parliamentary Assembly, and on 21-22 June Chisinau was visited by the OSCE Chairman in Office, the Bulgarian Foreign Minister Solomon Passy.

The visit of Solomon Passy had the objective "to support efforts towards the Transnistrian conflict resolution and encourage democratisation and the reform process in the entire country". Passy had a number of visits with high Moldovan officials, including the Moldovan President Vladimir Voronin and the Foreign Affairs Minister Andrei Stratan, as well as with representatives of civil society organisations and political parties. Passy also visited Tiraspol, where he had a meeting with the break away leader Igor Smirnov. During meetings with both sides, Passy presented them a package of draft agreements on a balanced reduction of military forces as well as confidence-building and transparency measures, worked earlier in June by the OSCE Mission to Moldova.

At the end of his visit, Passy held a press conference, during which he called upon the Moldovan and the Transnistrian authorities to speed up negotiations on the Transnistrian settlement. Referring to the current negotiations format, Passy said that "it is not a dogma" and may be changed, but he did not believe it rational to make "changes for the sake of changes".

Asked to comment on his meting with the Transnistrian leader Igor Smirnov, Passy said that Smirnov seemed ready to engage in dialogue. "We presented him our proposals, and he engaged to examine them ", said Passy. In his general assessment of a viable solution of the Transnistria conflict, he said that it is essential that such a solution is accepted by all sides.

2. The negotiations round on 23-24 June

One day after the end of the visit of Solomon Passy to Moldova, in Chisinau and Tiraspol a new round of negotiations took place. During the round, Chisinau officially joined the political plan drafted under the OSCE aegis and which included some of the Moldovan proposals on the Transnistrian settlement.

At a press conference held at the end of the round, the Head of the OSCE Mission to Chisinau, William Hill, said that Moldova's move was a positive result of the talks and an important step towards a political settlement. At the same time, Hill regretted that the Transnistrian delegation did not attend the talks, after the mediators had not accepted Transnistrians' proposal to postpone the round for 30 June to allow them enough time to examine the demilitarisation proposals presented to them by Solomon Passy. Thus, in the absence of the Transnistrian delegation, Hill said the round was rather one of "consultations" and reminded the Transnistrian side that their verbal commitment to attend negotiation rounds should be proved by acts.

During the same press conference, Hill referred briefly to the demilitarisation proposals presented by Solomon Passy and explained that both sides accepted to examine them. Hill specified that Moldova's demilitarisation had nothing to do with the withdrawal of Russian weapons and troops from Transnistria, which falls under the commitments assumed by Russia at the OSCE Summits in Istanbul and Porto.

The next round of talks with the participation of the Russian, Ukrainian and OSCE mediators has been scheduled for 21 and 22 July.

3. New ICG Report on Moldova

The International Crisis Group (ICG), an independent think tank working through field based analysis and high level advocacy to prevent and resolve deadly conflicts, published on 17 June 2004 a new report on Moldova, "Moldova: Regional tensions Over Transnistria". The report asserts that "resolving the Transnistrian secessionist dispute in Moldova is vital to remove a potential source of chaos on the periphery of the expanding European Union, to implement an important part of the post-Cold War settlement, and to make Moldova itself a more viable state," and advocates for "greater U.S. and EU engagement with the stalled peace process" as essential to bringing a settlement of the dispute.

The report analyses the motivations governing Russian and Ukrainian policy towards Moldova and Transnistria, and outlines the attempts by the Transnistrian officials to enhance their influence in those two countries. The report refutes the orthodox view held by the opposition forces in Chisinau that that external support to Transnistria stems solely from Russia, and argues that the break away leadership has constantly tried to diversify its external support and secure greater backing from Ukraine. Over the years, Transnistria has developed into "a self aware political entity with own interests that it is able to advance through lobbying, economic opportunism, political posturing and creative negotiating".

Referring to Russia's role in the Transnistrian conflict settlement, the report devotes particular attention to Russia's unilateral effort to push through a settlement in 2003 (the "Kozak Memorandum" affair). The report discloses a wealth of detail about the background of the document and the diplomacy surrounding it, most of which have been unknown to the Moldovan public opinion. The report argues that the failure of the plan has been an indication of the limits of Russian influence, which has proved unable to push through a settlement without the support of Moldova and of the international community. At the same time the affair has also showed that the latter needs Russia and its considerable influence over the Transnistrian leadership if it is to mediate a political settlement.

The report concludes that "Russia's heavy handed role in the negotiations has produced the opposite effect, as illustrated by the fact that a communist government in Chisinau has made European integration its highest foreign policy goal". Finally, the report advocates for greater Western support, especially in tackling the illegal business activity and the external support that sustains the break away regime in Transnistria.

The full text of the report may be found at www.icg.org. This is the second report in a series of IGC reports of Moldova. The first report "Moldova: No Quick Fix" was published last August and included an analysis of the background of the conflict and of the past and current conflict resolution efforts.

III. Foreign affairs

1. Republic of Moldova - EU Action Plan

Although only three negotiations rounds on the Republic of Moldova - EU Action Plan were initially scheduled, on June 15 the fourth round of bilateral consultations was held in Brussels. Ministry of Foreign Affairs press release reads that during the round "parties reached an understanding on the content of this bilateral political document", that outlines the framework of cooperation between Republic of Moldova and EU in the next three years. The press release is rather vague when it comes to the date of signing the Plan "once both parties complete the internal procedures". During a press upon his arrival in the country, Minister of Foreign Affairs Stratan stated that the Plan was to be signed by both parties by the end of July, so that it would be enforced commencing September. Initially it was expected that the Action Plan would be signed in mid-May, however due to delays it was to be signed by the mid of the next month.

The press release issued by the Ministry of Foreign Affairs reads "Moldova is invited to establish closer political, security, economic and cultural ties with EU and boost cross-border cooperation as well as share the responsibility for preventing and settling conflicts", as well as "one of the main objectives of the Plan would be continuing supporting a viable resolution of the Transnistrian conflict, EU being ready to continue its involvement in the process by all the instruments at hand".

As for economic benefits awaiting Moldova once it signs the document, one should mention the opportunity to advance towards "significant degree of integration, including via access to EU internal market", a first step being EU allowing for asymmetric trade, which could be viewed as a tremendous success of Moldovan diplomacy.

It is worth mentioning that the Action Plan provides for EU assistance to Moldova in view of adjusting its legislation to European standards, in particular by means of TAIEX office and strengthening institutional capacity, as well as cooperation with Europol and Eurojust.

Action Plan also provides for the possibility to consider other contractual agreements between the contracting parties depending on how the measures outlined in the Plan are being implemented as well as on the relations between Moldova and EU. In this respect the head of Moldovan diplomacy, Andrei Stratan stated that "once Moldova fulfils the tasks outlined in the document, it would acquire a more advanced status in relations with EU, and Chisinau aspiration to become an associated member might become quite realistic".

IV. Studies, analyses, comments

Challenges faced by the National Bank
Iurie Gotisan, 30 June 2004

Undoubtedly, one may find Moldova's macroeconomic achievements (given the economic growth registered in the last three years) acceptable, as banking sector managed to steer away from a system crisis despite the difficulties it faced

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When would elections be held?
Igor Botan, 30 June 2004

Recently amendments to the Law on the Procedure of Electing the President of the Republic of Moldova were operated, under which "The Parliament of the same legislature gets to elect the President only once, except for cases of vacancy of the position"

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