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Activity of Public Institutions

Parliament
Government
Presidency

Ukrainian plan, Igor Botan

Activity of Public Institutions

Parliament

1.1. Live TV coverage of the legislative sessions

Parliament sessions held during the aforesaid period were broadcast live by the national TV and radio stations. This fact alone deeply marked the agenda of the day. Previously it took deputies at most half an hour to examine 10-15 draft laws, while now since the media coverage, it took them half an hour to decide on agenda alone, and 3 hours to examine a couple of draft laws.

The mere mention of the cost born by the state for live coverage reasoned many deputies to be brief in their speeches. However, not all the opposition viewed positively the constant reminders on the cost of their long discourses.

1.2. Legislative documents

Via the Law on the Modification of the Law on Education Parliament introduced new provisions regarding:

1. Establishment of higher education institutions by the President of the Republic of Moldova. Under the law, the President decides on the Government propositions to establish, reorganize or liquidate universities, research institutes and professional development institutions. In addition, the President approves via a decree the bylaws of the institutions, universities functioning under the Presidency. The deans of such institutions shall be appointed by the President himself, in contrast to the deans of state universities, who are selected by the University senate and are approved by the Government.
2. Modernization of the higher education and streamlining it in the European education system. The law is intended to adjust Moldovan education system to the European standards and joining the so-called "Bologna process" in 2005. Higher education would consist of two stages: 3-4 years license cycle and a 1-2 years masters degree. The law also provides for obligatory introduction of European Credit Transfer System. In addition, the medical and pharmacy education shall be reformed.

Via the Law on Canceling Penalties and Dues to "Combustibil Solid" Enterprise the Parliament cancelled dues worth 11.3 thousand USD and fines worth 182.1 thousand USD to "Combustibil-Solid" for the credits it received to purchase coal. Ministry of Finance explained the move by the fact that it failed to reimburse "Combustibil Solid" the coal delivered to social sphere.

Another important piece of legislation approved by the Parliament was the Law on the Ratification of the Credit Agreement of the Council of Europe Development Bank. The Agreement provides for a 6 million Euro credit for implementing the project "Transfusion security in the Republic of Moldova". The credit is provided for a 20 year period, with a five year grace period and a 2.5% interest rate. The total project cost is worth 10 million Euro and it is aimed at improving the quality of medical services in the country by means of improving the collection, storage and provision of blood.

Law on the Modification and Completion of the Law on the Land Normative Price and Sale-Purchase extended to 2007 the deadline for enforcing the reduced ratio on the sale of plots neighboring enterprises. The law also amended the procedure of distributing funds accrued from the sale or purchase of plots (80% to the state budget, 20% treasury).

The Law on Exempting from Income Tax the Sale of Agricultural Plots Intended for the Revaca - Cainari Railroad is intended to speed up the construction of the aforesaid railroad that would bypass Bender, thus avoiding any delays from the Transdnistrian side. The losses to the state budget as a result of the exemptions are estimated at 800,000 MDL, money which would be later recovered by enhancing traffic of goods and people. It is scheduled to complete construction works by the end of the year.

Law on Modification and Completion of the Laws on Social Security of the Unemployed provides:

1. Categories entitled to unemployment compensation, professional re-qualification;
2. Legal status of the private employment agencies;
3. Employment of the rural population by allowing employment in localities other than their place of residence;
4. Professional development for youth (16-18 years), graduates of boarding schools, orphans, children without parents, children in custody, traffic victims, etc;
5. Reducing unemployment compensation from 50-60% to 30-50% of the previous salary, given the increasing number of wages lower than the unemployment compensation.

(For more information on the legislative activity please see "Legal Commentaries" on ADEPT website).

Government

2.1. Reshuffles

Following the Government reform, each Ministry would be entitled to two Deputy Ministers, as compared to three in the previous Government. On May 4, Government appointed Ion Coropcean as Deputy Minister of Defense; Pavel Buceatchi - Deputy Minister of Informational Development and Telecommunications; Victor Postolachi - Deputy Minister for Reintegration; Tatiana Lapicus - Deputy Minister of Culture and Tourism; Nicolae Esanu - Deputy Minister of Justice; Eugenia Chistruga - Deputy Minister of Foreign Affairs and European Integration; Vladimir Botnari and Iurie Cozma - Deputy Minister of Interior; Boris Golovin - Deputy Minister of Healthcare and Social Security; Valentin Dragan - Deputy Minister of Roads and Transportation; Anatol Spivacenco - Deputy Minister of Agriculture and Food Industry; Feodosia Furculita and Mihail Pop Deputy Minister of Finance; Vasile Mamaliga - Deputy Minister of Industry and Infrastructure; Sergiu Sainciuc - Deputy Minister of Economy; Petru Silvestru - Deputy Minister of Environment and Natural Resources; Aurelia Moldovan-Batrinac - Deputy Minister of Education, Youth and Sports. The same day Government appointed Sergiu Puscuta as the Head of Tax Inspectorate.

Later Government completed the list of deputy ministers with Igor Semenovker, Elena Mocanu and Igor Dodon of the Ministry of Industry and Infrastructure, Ministry of Justice and Ministry of Economy and Trade respectively. In addition, Government approved deputy directors of the governmental agencies, namely: Nicolae Gumenii of the Customs Department; Andrei Ivancov of the Center for Fighting Economic Crime and Corruption; Adrian Fetescu of the Licensing Chamber; Stefan Crigan of the Cadastre Agency, and Anatol Gorila of the Border Service.

2.2. Resolutions

• On May 6, Government approved the Resolution of the Council of CIS Heads of State and Government on Conception on Cooperation and Coordination on foreign currency, signed on September 15, 2004 at Astana. Moldovan Government endorsed the document with one reserve: "As part of this Conception, Republic of Moldova will take part exclusively in the establishment of a system for analyzing the current state and of the CIS financial markets, as well as in the development of a single CIS database".

• Similarly, Government approved the Agreement on reciprocal recognition and validation of graduation certificates in the secondary, professional and specialized education.

• To ensure a better representation of the Government in Parliament, this responsibility was delegated to the Ministry of Justice, specifically Deputy Minister Nicolae Esanu. He would be entrusted to ensure the liaison between Government and Parliament, to coordinate lobbying of draft laws and resolutions submitted by the executive to the legislators.

• Government approved a draft law on ratifying Protocol no. 14 to the Covenant on human rights and freedoms that amends the control system over Covenant.

• On May 18, Government ruled for the liquidation of the Russian governmental daily Nezavisimaia Moldova. Noteworthy, that was one of the conditions set forth by Iurie Rosca for voting in favor of Voronin. Media watchers say there was a more or less overt link between the shut down of the newspaper and the shut down of the Info-prim agency, voted by Communist and Christian-Democrats councilors in Chisinau Municipal Council. To put it differently, the price paid for the liquidation of the governmental newspaper was the fate of municipal press agency. This is a quite reasonable deal, since neither of them paid from their own pocket.

  According to Iurii Tiscenco, Editor in Chief of Nezavisimaia Moldova, the newspaper would be published two more months, afterwards the newspaper "will seize to be governmental. We are now seeking funds, and we have already found someone willing to pay".

3. Presidency

3.1. Decrete

On May 17 the President approved the structure of his apparatus and its regulation. Presidential apparatus consists of:

1. Law and Public Relations Department;
2. Information Analytical Department;
3. General Department;
4. Supreme Security Council Service;
5. Press Service;
6. Protocol service.

Apparatus includes the following councilors:

1. Councilor on legal issues;
2. Councilor on social issues;
3. Councilor on home affairs;
4. Councilor on foreign policy;
5. Councilor one economic issues;
6. Councilor on culture, education and science;
7. Councilor on agriculture, industry and local government;
8. Councilor on special missions.

According to the Regulation of the Presidential apparatus, senior consultants or referents are entrusted to provide informational and organization support to councilors.

Law and Public Relations Department consists of Acts Service and Petitions and Hearings Service. The former includes: Promulgation Section and Citizenship, Pardon and State Distinctions Section. As for the General Department, in includes: Section overseeing enforcement of Presidential decrees, Editing-translation Section, Typing and Copying Section; Chancellery and Financial Department.

Apparatus Departments are headed by the Department Chiefs, while services by service chiefs. Noteworthy, the Chief of Supreme Security Council also acts as its secretary, while the Chief of Press Service as a spokesperson.

3.2. End of the "cold war" with the mayoralty

The visit paid by President Voronin to the mayoralty was in the center of public attention. And this because the relations between central and local government have never been colder than in the last 6-7 months, especially since moguls in the mayoralty, including former mayor Serafim Urechean had been under investigations.

Albeit it was publicly stated that the visit sought to identify solutions to the multiple problems the capital city faced, domestic observers made a connection between the visit and upcoming campaign for the mayoralty. The stock of problems identified by President Voronin included: streets lighting, neighborhoods security, roof renovation, improving "Apa Canal" activity, enforcing capital's development plan, perfecting the legal framework in view of clearly stipulating praetors' responsibilities.

Economic Policies

1. Prices

Moldova registered a 1.4 percent inflation rate in April. The cumulative rate for the first four months of this year was 5.5 percent, compared with December 2004. The inflation rate this year could exceed the 12.5 percent rate registered in 2004, if the current tendencies do not change.

The food consumption index rose last month by 1.8 percent, the index of manufactured goods rose by 1.3 percent, and tariffs of services provided to population increased by 0.8 percent.

Prices of fresh fruits rose by 17.3 percent, fresh vegetables by 6.2 percent, sugar by 3.5 percent, potatoes by 2.4 percent. Prices of fuels grew by 3.7 percent (including petrol and Diesel oil by 4.5 percent, bottled liquid gas by 3.2 percent) and drugs by 1.6 percent. The public transportation tariffs rose by 7.8 percent.

The higher prices of fuels will unquestionably become a sure source to increase the inflation. The dangers for the planned ten-percent annual inflation rate and evolution of prices in the first four months undermine the efforts to comply with the annual inflationary parameters. The price of fuels represents a serious threat, being reflected in many of consumer prices. A higher price of fuels is not a bad news for the state budget at all costs, since it will bring higher excises.

Growths of oil quotations and imports with increased values have less positive influences on the deficit of current account and trade balance, which became deeper in the first quarter of this year. To combat the effects of a record rise of prices of fuels imported by Moldova, the government should reduce the excises and withdraw the VAT for excises. However, the executive did not work out any draft normative document in this regard.

Let's remember that the inflation rate in April 2004 was 0.9 percent, while the cumulative rate for the first four months of 2004 was 3.9 percent, by 1.6 percentage points less.

2. Banks and insurance

• Evolution of the bank system in Moldova registered positive tendencies in the 1st quarter of 2005. One of key indicators of the system, the 1st-degree capital, rose by 3.9 percent up to 2,54 billion lei. The growth was particularly due to bank incomes and encouraged the consolidation of the system in continuation.

  The share of foreign investments in bank capital was 51.6 percent in the first quarter of 2005, and dropped by 0.8 percentage points compared with early this year.

  Assets rose by 3.3 percent in the 1st quarter, up to about 13.76 billion lei. The central bank estimates that the growth of this indicator indicates an encouraging tendency and it is mainly financed by new deposits and incomes.

  The cash rose by 12.2 percent up to 823.7 million lei, while money owed by banks and the National Bank of Moldova (BNM) grew by 2.5 percent up to 3.29 billion lei, securities increased by 41.6 percent up to 1.37 billion lei, other assets by 3.3 percent up to 1.2 billion lei.

  The bank credits were diversified enough, with risks being distributed in all major economic sectors. Credits released to industry and trade held the largest share in the total of credit portfolio in late March - about 47 percent, followed by agriculture and food industry - 27.3 percent, loans for real estate, constructions and development 6.4 percent.

  Deposits of individuals rose by 11.7 percent up to about 5.43 billion lei, compared with the first quarter of 2004.

  The net income on bank system amounted to 109.4 million lei in late

  March. Profitableness of assets and shareholder capital was 3.2 percent and, respectively, 16.6 percent, by 0.6 percentage points and 1.5 percentage points less than early this year. The decline was almost due to transformation of interest generating liquid means into liquid means which do not generate interest, and this eases their allocation for investment projects.

• The latest report of the National Bureau for Statistics (BNS) shows that insurance companies in Moldova paid 174 million lei in damages (56 million lei to individuals) in 2004. This is a 44-percent growth compared with 2003.

  Also, incomes from insurance policies rose by over 35 percent compared with 2003 up to 420 million lei last year, including 135 million lei from individuals. The total revenue of insurance companies in 2004 accounted for about 494 million lei.

3. Foreign trade

Moldova's foreign trade turned over 13.15 billion lei (1.05 billion dollars) in the first four months of this year, that is 922.6 million lei more than in the similar period of 2004.

The imports were valued at 8.44 billion lei in January-April 2005, or 1.95 billion lei more or by 30 percent more than in the first four months of 2004. On the other hand, the exports declined by 18 percent, till 4.71 billion lei.

Overall the 15 customs offices in Moldova recorded more than 33,000 export/import operations in the past four months, and put the customs revenue at 986 million lei, or 30 percent more than during the same period last year.

On the other hand, the trade balance is worsening in continuation, while the trade deficit has almost doubled compared with January-February and rose up to 186.3 million dollars after three months. The trade deficit rose by about 75 percent compared with the first quarter of 2004.

The export growth in January-March this year was 6.8 percent, which is slower than in the first quarter of 2004, while the imports rose by about 29 percent.

Certainly, the growth of trade deficit is influenced by larger imports, generated in turn by rise of internal consumption. In other terms, Moldovans and the state consume more and raise larger debts.

The commercial policy of the government can also offer an explanation in this regard. As for example, the commercial facilities in effect for a range of imports are equivalent with a real appreciation of the national currency, which encourages the imports. The reduction of productivity of industry, which declined the volume of goods supplied to foreign markets, is another important factor which influenced the growth of trade deficit.

Moldova's foreign trade	2003	Q1'04	Q1-Q2'04	Q1-Q3'04	2004	Q1'05
Exports, millions USD	1059,40	233,4	460,2	701,3	1317,48	249,4
Imports, millions USD	1728,29	338,0	773,5	1215,5	2130,56	435,7
Trade balance deficit, millions USD	-668,89	-105	-313,3	-514,2	-813,08	-186,3

Sourse: NBM, BNS

4. Moldova and the world

Moldova is ranked on the last but one place in the Commonwealth of Independent States (CIS) regarding the industrial growth. The industrial production in Moldova rose by 3.2 percent in the first quarter and it left behind only Kyrgyzstan, which posted a 4.7 percent industrial regress.

On the other hand, Moldova was ranked after Russia, which reported a 3.9 percent industrial growth, Armenia 5.1 percent, Ukraine, and Georgia by 7.1 percent, Kazakhstan 7.4 percent, Tajikistan 8.2 percent, Azerbaijan 10.3 percent. Belarus reported the highest industrial advance in the CIS, respectively 11.6 percent, in the first three months of this year..

The industrial growth in the CIS was five percent on average, by four percent less compared with nine percent in the first quarter of 2004.

The Moldovan industry grew by 3.2 percent in January-March in comparable prices, compared with 16.7 percent in the similar period 2004. According to official data, industrial enterprises, except for businesses based in Transnistria, made production worth about 4.4 billion lei (over 350 million dollars) in comparable prices in the first quarter of this year.

Source: BNS

Transdnistrian Conflict

On 16-17 May in the Ukrainian town of Vinita took place a new round of consultations between the conflict parties and the mediators in the Transnistrian conflict settlement. The key issue discussed at the meeting was Ukraine's plan on the Transnistrian conflict settlement and the seven settlement principles proposed by President Yushcenko at the GUUAM Summit held in Chisinau recently.

In an interview to Radio Free Europe, the Head of the OSCE Mission to Moldova, William Hill, said that the Moldovan side reacted positively to Ukraine's plan, which the OSCE also supports, whereas the Transnistrian side had a number of questions about it. At the same time, Hill said that the Moldovan, Transnistrian, Ukrainian and OSCE representatives decided to invite the EU and US to join the settlement process as observers.

Moldovan and Ukrainian authorities published the plan a few days after the Vinita meeting (see full text in Russian at: www.mfa.gov.ua). The plan reiterates the principles of sovereignty and territorial integrity of the Republic of Moldova, proposes that a special legal status is granted to the Transnistrian region within the Republic of Moldova, provides for Transnistria's right to self determination only in the event that the Republic of Moldova loses its independence and sovereignty and proposes the creation of a common legal, economic, defence, social, customs and humanitarian space. The plan envisages early free and fair elections to the Transnistrian 'supreme soviet' under international monitoring before Moldova recognises this body as the legitimate representative body of the region. The settlement is to take place in threes stages, each stage not exceeding six months in duration. At the first stage, the Moldovan Parliament is to pass a law on the key principles of settling the status of the Transnistrian region, on the basis of which Transnistria adopts a new Constitution. Then, in October-November 2005, free and fair elections to the 'supreme soviet' are organised under OSCE aegis. A parliamentary commission composed of Moldovan and Transnistrian deputies then prepare a draft law on the status of Transnistria, which is to be passed by the Moldovan Parliament. The law enters into force upon the approval by the Moldovan Parliament of an Agreement on Guarantees on the Observation by the Republic of Moldova of the Status of Transnistria, concluded among the future guarantors - Russia, Ukraine and OSCE, possibly assisted by the US and the EU. Lastly, a Conciliation Committee is set up of representatives of the two parties, Ukraine, Russia, OSCE and possibly the US and the EU, which is to settle all disputes arising from the implementation and/or interpretation of the provisions of the Law on Transnistria status.

At a press-conference held soon after the plan was published, Minister of Reintegration Sova said that the Moldovan authorities are generally happy with the plan and are ready to start implementing it.

On the other hand, analysts and political party leaders identified a number of weaknesses of the plan, such as the requirement that the law on the status of Transnistria is developed in accordance with previous documents signed within the Transnistrian settlement process, the provision on granting Transnistria the status of 'republic', and a clause allowing Transnistria to participate in foreign policy decisions affecting it, which literally entitles Transnistria to veto any decision on the withdrawal of Russian army from the region.

Although initially the Transnistrian authorities reacted positively to most of President Yushcenko's seven principles, the tone in Tiraspol has changed now that the entire plan has been disclosed. According to the official news agency Olvia-press, the plan is but a cover under which the Moldovan Government intends to decide the destiny of Transnistria and mobilise international pressure against it. Tiraspol rejects the idea to extend the negotiations format by inviting the US and EU to join it and the democratisation plan which is to result in Moldovan parties and candidates running for the Transnistrian 'supreme soviet'. The Olvia-press commentator has reasons to be worried about the new plan, however the most serious threat being faced now by the break away regime comes from inside rather than outside the regime.

Thus, on 19 May, 34 out of the 37 deputies in the Transnistrian 'supreme soviet' voted for a number of amendments to the 'Transnistrian constitution' intended to scrap the powers of the 'president' and increase the role of the 'supreme soviet' (the legislative body) in the interpretation of the 'Constitution' and its control functions in relation to the administration and use of state property, activity of the Central Bank, the process of denationalisation and privatisation, creation and implementation of 'state budget' and the 'public spending'. The amendments were initiated by a group of deputies headed by Evghenii Sevciuc, Deputy Speaker of the legislative, who is reportedly linked to wealthy business circles unhappy with the Smirnov regime. The deputies intend to take the constitutional reform as far as to transfer most powers from the executive power to the legislative one.

This unprecedented blow to the Smirnov regime is likely to change radically the internal political dynamics of the Transnistrian region. However, one cannot be sure that this will necessarily benefit the conflict resolution process, as Minister Sova hopes it would thus helping the Moldovans put the Ukrainian plan into place. Evghenii Sevciuc is known as a moderate reformer, but his ultimate aim is to consolidate the independence of Transnistria. However, an eventual split in the Transnistrian ruling elite and the removal of Smirnov from power will eventually weaken the regime, and, with an appropriate dose of diplomatic and economic pressure from both Moldova and its neighbours, one day it might simply collapse.

Foreign Affairs

1. Informal CIS Summit

On May 8, on the occasion of 60th anniversary of the Victory Day, ten CIS Head of States gathered in Moscow for an informal CIS Summit, including Moldovan President, Vladimir Voronin. Absent were Azerbaijan's Ilham Aliev and Georgia's Mikhail Saakashvili.

According to the Presidential press service, during the talks on adjusting national laws on social security of the veterans, President Voronin underscored the importance of clear-cut regulation of the pension allocation to veterans. Also President Voronin talked migration within CIS and joining efforts to fight international terrorism, cross-border terrorism, smuggling and trafficking in human beings.

While in Moscow, Voronin met his Armenian counterpart Robert Kocearean to examine the possibility of bilateral cooperation in winery, transportation, IT and culture.

At the end of the summit Vladimir Voronin together with other heads of state signed a Joint Declaration on Humanitarian Cooperation between CIS member states.

2. Bucharest SEECP Summit

On May 11, Bucharest hosted the 8th Summit of South-East European Cooperation Process (SEECP). Albeit Republic of Moldova took part at the event as an observer, Moldovan diplomats strive to become full rights members.

President Voronin heading Moldovan delegation reiterated Moldova's interest to join the structure, praised Romanian chairmanship over the process, and announced Moldova's readiness to support a joint campaign on fighting organized crime and corruption. Voronin also informed that Moldova had already developed an action plan on its participation in the South-East European Cooperation Process.

Given that many regional organizations are complementary and RM took over the chairmanship over two of them, i.e. GUUAM and Organization for Economic Cooperation in the Black Sea region, President Voronin proposed hosting a joint meeting of the different fora: Stability Pact for Southeastern Europe, South-East European Cooperation Process, GUUAM and Organization for Economic Cooperation in the Black Sea region. The agenda of such a forum might include multilateral cooperation in fighting terrorism, trafficking in human beings, organized crime, corruption, energy and infrastructure.

Participants to the Bucharest forum signed a Declaration of the 8th Summit of South-East European Cooperation Process. The document includes 29 points touching upon cooperation in economy, home security, and justice. For Chisinau the third point of the Declaration is the most relevant as it entrusted the Committee of Political Directors to reexamine Republic of Moldova's application to be accepted as a full rights member.

3. Council of Europe Summit

The Third Summit of Heads of State and Government of the Council of Europe grabbed the attention of the international public opinion for two days. The Third Summit was hosted by Warsaw, following similar summits in Vienna 1993 and Strasbourg 1997. This time however, the Summit gathered all the European countries except for Belarus.

President Vladimir Voronin headed the Moldovan delegation which had meetings among others with, Secretary General Terry Davis; Commissioner for External Relations and European Neighborhood Policy Benita Ferrero-Waldne; President of the Congress of Local and Regional Authorities Giovanni Di Stasi; Polish President Alexander Kwasniewski, Latvia's Vaira Vike-Freiberga and Lithuania's Valdas Adamkus; as well as Ukrainian Minister of Foreign Affairs Boris Tarasiuk. High on the agenda of the meetings were resolution of the Transdniestrian conflict, enforcement of the EU-RM Action Plan, local government reform.

Along other Heads of State President Voronin signed three European Conventions: Convention on the prevention of terrorism, Convention on laundering, search, seizure and confiscation of the proceeds from crime and on the financing of terrorism, and Convention on action against trafficking in human beings.

4. Stability Pact's Regional Table

On May 18 Moldovan delegation flew to Sofia for the Stability Pact's Regional Table. Regional Table unites beneficiary and donor states as well as international organizations. The meeting of the Regional Table was preceded by a day (17 May) of theme-focused Working Table meetings where issues of regional ownership, regional infrastructure and energy and defence conversion were debated. During the first table "Democracy and Human Rights" discussion centered around boosting cross-border cooperation on "Education and Youth" dimension.

Studies, Analyses, Comments

Ukrainian plan
Igor Botan, 27 May 2005

"Ukrainian plan" of resolving Transdnistrian conflict is also Moldova

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