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Activity of Public Institutions

Parliament
Government
Presidency

Electoral polygon by Igor Botan
Economic growth of conjuncture by Iurie Gotisan

Activity of Public Institutions

Parliament

1.1. Appointments

• Lawmakers appointed Deputy Speakers Iurie Rosca and Maria Postoico as members of the permanent commission for national security, defence and public order. These appointments are based on amendments to the Parliament's Regulation at the initiative of the Christian Democratic People's Party (PPCD), in line with conditions for election of Moldovan president. These provisions from the Parliament's Regulation stipulate that a subcommission in charge with parliamentary control on activity of Information and Security Service, headed by a parliamentary opposition representative.
• Ivan Cucu was appointed ombudsman at the initiative of lawmakers representing the Party of Moldovan Communists (PCRM), with the support of other opposition factions ((PPCD) and Democratic Party (PD). The Our Moldova Alliance (AMN) faction criticized the appointment of Cucu as ombudsman, fearing that the promotion of a person close to the ruling party politicises the ombudsman institution. Ivan Cucu had worked as lawyer for at least 30 years. He was a member of the Central Election Commission (CEC) in 2003-2005, including deputy chairman of CEC.

1.2. Legislative documents

• Draft state budget law for 2006. The Parliament past the draft state budget law for 2006 in two readings with the vote of 55 PCRM lawmakers. According to basic indicators included in this document, 9,690.2 billion lei is expected in revenues and 10,024.8 billion lei in spending, and a budgetary deficit of 334.6 million lei is expected next year.

  The majority faction alone has voted the document, describing it as realistic, of perspective and of social orientation, (about 60 percent of spending has a social destination). The other factions and parliamentary groups criticized the drafting principles of this document and its developers for lack of new concepts of economic growth and efficient spending of public money. The opposition representatives who turned down the draft raised the following objections among others:

  • creation of revenues mainly from taxes and value-added for imported goods;
  • introduction of VAT for a number of imports (drugs and mineral fertilisers);
  • rise of tax on agricultural production;
  • introduction of higher duties for importation of agricultural and electronic hardware;
  • higher spending for public institutions, police and law enforcement bodies;
  • allocation of very large amounts for reconstruction and modernisation of some administrative and entertainment headquarters;
  • lower share of investments for real sector of economy.

  Some opposition factions did not rule out the possibility to vote the budget law in the final reading, if their proposals and objections are taken into consideration. Even more, PPCD faction representatives said that "it is very important to draft a final version of the state budget law, which all lawmakers would back through consensus, in the spirit of political partnership and cooperation that must be based on interests of entire society."

• Draft state social insurance budget law for 2006. The law adopted in the first reading stipulates revenues and spending in the amount of about 4.5 billion lei, which would be raised on basis of the same principle of "solidarity with mandatory contributions," unlike cumulative and free systems applied in developed countries. Employers will pay next year 26 percent of the salary fund for people employed through an individual labour contract, while workers will pay 3 percent of the salary for individual insurance. It stipulates an insignificant rise of the single birth indemnity up to 600 lei and a 480-leu annual tax for landowners.

  The numbers of births and workers are on the decline in Moldova since the voted law proposes a reduction of the fund for assistance of large families and fund for compensation for work accidents, and a rise of the unemployment fund. According to statistics for nine months of 2005, the population rise is negative, the birth rate is similar to the rate registered in the same period of 2004, while death rate is on the rise. As many as 28,837 children were born in Moldova in the period concerned, while 33,059 persons died.

  Opposition representatives criticized the draft law, saying that it is imperfect, discourages youths and growth of population, disfavours farmers and encourages mainly functionaries working in this system. The opposition factions conditioned again the possibility to back the state social insurance budget law for 2006 in the final reading with the support for their proposals and amendments.

• Law on measures aimed to improve economic-financial condition of cereal enterprises. The legislative document was tabled in 2004 and seeks the annulment of debts of cereal enterprises towards Finance Ministry, resulted from difference of prices for acquisition of cereals purchased from external credits and existing prices on domestic market during reception.

  In 1993-1996, Moldova received external loans from the IMF, EBRD and U.S. Government for acquisition of some cereal products through the PL-480 Programme implemented by the U.S. Government. The total credits are estimated at about 96 million lei and most of them were not reimbursed because of faulty crediting conditions for businesses working in this sector: a preliminary financial analysis was absent; a high percent was established; delivered products had a low quality; the national currency depreciated after 1998; many enterprises working in this sector or partners went bankrupt, etc. The law aims to relieve working cereal enterprises from burden of debts, while collections planned for state budget will drop by about 100 million lei (unreimbursed sum and interests).

  Debates on this law raised many objections and proposals in the parliament, including on the need to hold additional controls on mode of administration of these credits, punishment of governmental officials who admit such consequences, and annulment of debt by the U.S. Government, but none of these initiatives and objections were included in the final document.

Government

2.1. Appointments

The Government has approved the candidacy of Veaceslav Madan for the post of Moldovan Ambassador to Bulgaria. Madan held the post of culture minister in 2002-2005.

It is worth to mention in this context that AMN Deputy Vitalia Pavlicenco demanded the presidency and foreign minister at the October 27 parliamentary sitting to provide information about criteria of selection for posts of Moldovan ambassadors to other countries. According to the AMN lawmaker, some persons who have recently been appointed to diplomatic posts "failed their tasks inside the country."

Deputy Oleg Serebrian invoked some shortcomings related to activity of the diplomatic service of Moldova, dismissal of certain experienced diplomats and use of indefinite employment criteria in the Foreign Ministry.

2.2. Sittings. Statements

Cabinet sitting "with participation of chief of state"

President Vladimir Voronin attended a cabinet sitting on October 26, 2005. Journalists had no access to the sitting room and video records practiced at sittings of executive until now. It was announced later that the chief of state spoke out about his wishes and visions on implementation of the action plan of the Government, as well as on economic situation.

Summaries released after this sitting envisage a number of shortcomings related to activity of executive, which the chief of state indicated in a "bitter and sincere" manner, soliciting to include them in a decision on talks. In particular, the president indicated aspects related to quality of economic growth, rise of industrial production, diversification of sale market and enhancement of competitiveness of goods made in Moldova. The chief of state asked the cabinet members to demonstrate initiative, while the entire executive was told to replace expectation with initiative and modernisation, including the state management sector.

The fact that first Deputy Premier Zinaida Grecianii, not the prime minister, reported on situation in the sector at the cabinet sitting and delivered some statements on this topic made many mass media institutions and political leaders tackle the probability of dismissal of Premier Vasile Tarlev, but Grecianii refuted these suppositions. To mention in this context that lawmakers from all parliamentary factions have launched many demands and even accusations against executive once the autumn session of legislature started, soliciting information about situation of economy and measures of the cabinet of ministers capable to improve it. The prime minister did not react to demands of lawmakers who solicited his presence, while ministers and deputy ministers answered most important topics in the Parliament.

Rise of gas prices becomes reality

The prime minister has confirmed that the Moldovan authorities do their best to reduce the effect of the expected rise of prices of natural gas supplied by the Russian Federation. Although Moldova considers possibilities to import natural gas from Turkmenistan or Kazakhstan, these possibilities are limited because the pipe is unique and belongs to the Russian Gazprom, so that Russia's consent will be needed in any situation.

Speaking about payment of the 120-million-dollar historical debt of Moldova towards Russia, Vasile Tarlev said that this problem would be discussed and solved only within the Paris-based Club of Creditors.

Mass media said that the Moldovan authorities consider the possibility to accept other fuel resources, but fell short of revealing their nature and capacity of alternative resources to ensure the economic and social needs of the country.

Declaration on delivery of weapons from Transnistria to Chechen separatists

Vasile Tarlev has told Russian journalists that the Moldovan authorities hold information confirming that one part of the Russian arsenal in Transnistria arrived in hands of Chechen separatists and it could be used for the September 2004 terrorist attack in the Beslan city. According to the prime minister, the Russian Federation must withdraw its military depots from the left bank of the Dniester river by late 2005, including from these reasons.

On the other hand, Russian Defence Minister Sergey Ivanov excluded the probability of disappearance of ammunition from depots administrated by Russian military contingent in Transnistria. He described these statements as groundless and noted that "peacekeepers would not leave the region but after adoption of a political decision on Transnistrian conflict."

Government wants means of citizens

The Government intends to implement a series of investment projects by late 2005 aimed to attract means from individuals, especially from Moldovans who work abroad. According to first Deputy Premier Zinaida Grecianii, these projects could reduce the pressure of remittances of illegal workers on national currency and their reorientation from consumption to development of Moldova's economy.

Perspectives of resumption of cooperation with IMF

The Moldovan authorities hope to sign a new financial programme with the International Monetary Fund this year. The economics and trade minister has confirmed that "the recent IMF mission was persuaded regarding the need of a new programme." IMF experts studied the draft state budget law for 2006 and "raised no reservations against its indicators." Earlier, the IMF chief negotiator for Moldova had estimated that the authorities registered a series of progresses, but they still have to solve problems related to anti-corruption fight, more independence for the National Bank of Moldova, promotion of administrative and fiscal reform, and continuation of privatisation.

2.3. Resolutions. Decisions

A monitoring system for EGPRSP

The Economics and Trade Ministry has worked out a three-dimension system for monitoring and appreciation of implementation of the Economic Growth and Poverty Reduction Strategy Paper (EGPRSP). A chapter of the system will envisage financial resources for implementation of EGPRSP; the second chapter calls for a quantitative and qualitative monitoring of measures and indicators included in EGPRSP, while the third chapter will appreciate the results of economic and social policies implemented within EGPRSP.

Representatives of competent authorities and associative sector will participate in roundtables on examination of quarterly and annual reports on implementation of EGPRSP.

Support for young teachers

The executive has approved a regulation of the fund for assistance of young teachers in rural areas, which says that young teachers will receive 7,000 lei within one month after employment in line with assignment of the Education Ministry. Another 10,000 lei will be paid to young teachers after one year of work, and 13,000 lei after three years of work. Young graduates from secondary pedagogical institutions will receive a 24,000-leu indemnity under similar conditions. Young specialists who paid for their education will also benefit from this indemnity, if they get employed in line with assignment.

3. Presidency

3.1. Decrees

The chief of state has awarded the Labour Glory order to new Finance Minister Mihail Pop, with only two weeks after appointment, on his 50th anniversary. The order was awarded for long work in public administration bodies, high professionalism and contribution to improvement of financial-economic system of the country.

The chief of state awarded the Civic Merit medal to Mr. Brock Bierman, director of the Department for Europe and Eurasia of the United States Agency for International Development (USAID), for intense support for democratic reforms and social-economic actions in Moldova.

3.2. Statements. Sittings

Transnistrian authorities have sold weapons

Vladimir Voronin told a meeting with a group of Russian journalists that the Russian Federation supports Moldova's eastern breakaway enclave of Transnistria, and this country must withdraw its ammunition from this region. The Moldovan president noted that he holds data confirming that Tiraspol had sold weapons to the regime of Saddam Hussein. Competent services are studying these documents from the chancellery of Saddam Hussein. The chief of state fell short of revealing how the Moldovan authorities have got these documents and if they notified the Russian authorities.

Vladimir Voronin accused some state institutions of the Russian Federation of supporting the Tiraspol regime directly or indirectly through their actions. He indicated among others the State Duma of the Russian Federation (which is not informed enough and passes different provocative decisions), Defence Ministry (which delivers statements on the process of pullout of Russian troops from Tiraspol), the Central Bank of Russia (which opened correspondent accounts for transnistrian banks), Chamber of Industry and Trade (which issues certificates for transnistrian production).

Interview for Êîìñîìîëüñêàÿ ïðàâäà â Ìîëäîâå

Vladimir Voronin commented on political developments in Moldova in an interview with the Russian-language paper mentioned above.

In particular, the chief of state expressed satisfaction with activity of the Parliament, which has become "a much stronger political centre than previously." In addition, the Government must work more for modernisation. The president threw doubts on quality of economic growth, saying that there are no concrete accomplishments behind rise figures, the growth paces in agriculture and industry are on the decline, the number of jobs does not increase. He indicated the overestimation of accomplishments, faulty promotion of some reforms, including the regulation, among causes of this phenomenon.

Speaking about activity of law enforcement bodies and anti-corruption struggle, Vladimir Voronin said that there are some fields that require a more efficient work and a serious revision of health insurance sector, education in Chisinau, and activity of police bodies. At the same time, the chief of state said that he did not get involved in activity of law enforcement bodies, which undertook a number of holdings that mass media described as political persecutions, and he "personally will resist to transformation of anti-corruption fight into repressions." On the other hand, Mr. Voronin expressed dissatisfaction with activity of the company Air Moldova and officers of the Centre for the Struggle Against Economic Crimes and Corruption who "have left for this direction," but the president "has no intention to tolerate this situation."

Speaking about relations with the Russian Federation, Voronin reiterated the statements that Russian authorities are misinformed and the transnistrian conflict will be settled in line with the Ukrainian plan warmed by Chisinau.

Speaking about the forthcoming municipal elections, the president expressed regret that Chisinau residents did not back a proposal of PCRM last summer and promised that central authorities will cooperate with any mayor-general, though he indicated a fruitful cooperation with acting administration of the municipality."

Describing the political consensus as a vital necessity for country development, Voronin said that authorities must pay a constructive attitude to key problems, though there are many grounds to reconsider the situation. He underlined that "those who aim at disappearance of Moldova from the world map, rather than those in the Parliament" represent the opposition in Moldova.

Criticism of president

• The chief of state attended a sitting of the Ministry of Environment and Natural Resources on October 25, and demanded the ministry to review radically all principles and methods of activity. The ministry was told to overcome the "phase of findings and to get involved in real activities aimed to improve the sector of responsibility." He indicated the improvement and modernisation of environment legislation, combat of constructions in green areas under the pretext of free fields in the old city planning plan of Chisinau, lack of initiative from the Ministry of Environment and Natural Resources for implementation of national and international programmes on environment protection, implementation of legislation in effect, in order to stop the pollution of atmosphere, waters, soil, degradation of flora and fauna among key problems related to activity of the Environment Ministry.

• Participating in the October 26 cabinet sitting, the chief of state criticized the executive for low quality of economic growth, lack of initiative and poor execution discipline. He described any delay, manifestation of non-professionalism, any cases of meddling of some obscure interests admitted by executive as "anti-patriotic actions. Voronin's objections must be included in summary of a cabinet decision on governing programme called Modernisation of Country - Welfare of People.

  Article 83, which awards the right to the chief of state to attend sittings of the cabinet of ministers and to chair the sittings he attends, as well as the right to consult the executive on urgent issues and problems of special importance, was excluded from the supreme law through the July 2000 amendments to Constitution, which determined the introduction of the parliamentary system of political governance. However, the constitutional theory and practice admits the participation of chief of state in cabinet sittings, in the virtue of his quality of president, guarantor of sovereignty, national independence, territorial unity and integrity of the country (Article 77 of Moldovan Constitution).

• Vladimir Voronin attended on October 27 an enlarged sitting of the Prosecutor-General's Office that the prosecutor-general convoked at the initiative of the chief of state. The president warned the prosecutor's office representatives over "need to respect the legislation and fundamental human rights through use of process restriction measures - preventive holding and arrest." He bitterly criticized these practices applied by law enforcement bodies, saying that "the preventive arrest must not turn into evidence or penal punishment."

  The convocation of prosecutors and other representatives of law enforcement bodies and bitter criticism against their activity come shortly after a series of what mass media described as political arrests and after the European Court of Human Rights has sentenced Moldova for illegal detention of some persons.

  According to existing data, the penitentiary # 3 in the Chisinau municipality holds 559 persons (including 230 for more than 3 months, 132 more than 6 months, 155 for more than one year), and most of them are detained for a long time because the court is hardly examining their cases. Judges working in the Chisinau municipality have told a recent special sitting of the Supreme Court of Justice that negligent attitude of lawyers and prosecutors, insufficient court halls, translators and court clerks are among main causes that delay the lawsuits. The Supreme Court of Justice adopted a series of recommendations for heads of courts, including on "constructive cooperation" with prosecutor's office bodies, police and the bar in the process of presentation of evidence on time.

• Participating in a meeting of republican sport staff in physical training and sport sector, which took place on October 29, the chief of state described the situation in this field as complicated enough. Voronin named the shortcomings related to organisation of physical training in secondary education, unsatisfactory health condition of children and youths.

  The chief of state accused sport federations of admitting cases of trafficking in human beings and demanded the Ministry of Education, Youth and Sport to take efficient measures against this phenomenon.

3.3. Meetings. Working visits

The Moldovan president attended a meeting with a group of lawmakers of the Popular Assembly of the administrative territorial unit Gagauzia who proposed the amendment of legislation of autonomy, in particular, the provisions on election of Gagauzian governor. According to this initiative, the Popular Assembly will elect the governor and this would adjust the Gagauzian legislation to constitutional norms of Moldova and would allow a substantial reduction of budgetary means needed for organisation and conduct of elections, lawmakers said. The representatives of Gagauzia noted that this initiative "was inspired among others with political consensus established in the Moldovan Parliament after election of chief of state."

According to Voronin, the proposed amendments can be accepted only after consultation of opinion of the entire population of Gagauzia at a referendum, in order to avoid destabilisation of social-political situation in the autonomy.

It is important to highlight that the situation in the Gagauzian autonomy presents some signs of tension, being registered attempts on certain members of the Popular Assembly, as for example, the house of chairman of this representative structure Stepan Esir, leader of Communists in the autonomy, was the target of a grenade attempt.

Economic Policies

1. Financial-bank sector

Interest rates are on the decline...

The governor of the National Bank of Moldova (BNM) has told a meeting with functionaries of commercial banks that the central bank will not apply administrative methods in order to reduce interest rates on credits of commercial banks. The economic theory says that the money has a real price on market like other goods, while banks would not accept to give it to businesses for the same price, following their own profit first of all.

On the other hand, banks are interested in the bank client service margin, rather than in size of interests, which cannot be inferior to real conditions of the market - consumer price index (CPI) and monetary inflation. Moldova registers the lowest interest rate in the region this year - 4.9 percent in January-September.

CPI plus bank margin must make up the interest rates on credits that banks release to real sector of economy. The average bank margin after 2004 was 6.7 percent, so that real interests on credits must be now 12-14 percent.

Interest rates on credits granted by banks in Moldova registered a constant decreasing trend the past 2-3 months. This trend was actually observed at the same time with reduction of interest rates on deposits. The commercial bank Moldova Agroindbank lowered the interest rates for four types of credits granted to individuals down to 15 percent a year in early November.

President Voronin, who addressed the business forum "Investment Climate In Moldova" last September, admitted that foreign banks have tried to enter the country. He accused domestic banks of halting the development of Moldova, so that authorities will have to look for a strong, transparent bank to grant credits for an annual rate of 5-6 percent, since local institutions offer loans for interest rates of 20-21 percent.

Russian bank interested in bank institutions of Moldova...

The Russian bank Vneshtorgbank has recently posted intention to acquire a financial-bank institution in Moldova. This bank entity also targets at credit institutions in Belarus and Kazakhstan, and at Ukrainian banks Ukrsotbank or Ukrsibbank, with total assets worth about 3.6 billion dollars.

Governmental sources and BNM officially contest the fact that Vneshtorgbank is trying to enter the domestic market. BNM governor Leonid Talmaci has recently said that the central bank did not receive any applications from foreign banks.

Assets of commercial banks in Moldova are on the permanent rise...

According to data of BNM, total assets of commercial banks in Moldova rose by 22.3 percent in nine months of 2005, up to 16.26 billion lei (some 1,289 billion dollars).

The net income on bank system of Moldova rose by 10.5 percent compared with the similar period of 2004, up to 351.6 million lei. Deposits of population increased by 30.7 percent, up to 6,348 billion lei, while deposits of businesses rose by 21.9 percent, up to 5,317 billion lei.

The average rise of credit portfolios of commercial banks in Moldova accounted for 18.2 percent, up to 8.55 billion lei. About 48 percent out of the total number of credits went to industrial and commercial enterprises, 25.6 percent to agricultural businesses, 7 percent to companies dealing with sale of real estate, constructions and territorial development.

Profitableness of assets (RA) and shareholder capital (RC) accounted for 3.2 percent and respectively 17.3 percent in late September, by 0.5 percentage points less than in early 2005. Liquidity of banks remains, however, at a high level. The long-term liquidity coefficient (PI) was 0.6 (the norm is below 1.0), while current liquidity coefficient (PII) was 36.1 (norm is over 20.0).

2. Public finances

Budget collections continue to grow...

Although the share of income tax was reduced in 2005, the state budget collections continue to grow. Incomes of 6.27 billion lei (496.9 million dollars) went to the state budget in January-October 2005, by 427 million lei or 7.3 percent more than planned, and by 1.96 billion lei or 45.4 percent more than in the similar period of 2004.

Collections to budgets of administrative territorial units accounted for 1.54 billion lei in the first nine months of 2005, by 50 million lei more than planned and by 110 million lei more than in January-September 2004. Transfers from state budget to budgets of administrative territorial units were performed 100 percent and amounted to 1.07 billion lei in the period concerned.

Revenues of 2.33 billion lei went to state social insurance budget in the first ten months of 2005, by 7 million lei more than planned and by 402 million lei or 20.9 percent more than in the similar period of 2004.

Insurance taxes worth 352 million lei (98.8 percent) went to the mandatory health insurance budget in January-October 2005, compared with 357 million lei planned, but by 96 million lei or 37 percent more than in the similar period of 2004.

3. Labour market

Medium salary in budgetary sector is on the decline...

The medium salary in budgetary sector accounted for 981 lei (78.5 dollars) in September, and dropped significantly compared with the precedent month, while average salary in real sector amounted to 1,521.6 lei. Thus, the salary of budgetary employees dropped for the third month in a row, after this indicator decline by 181 lei in July and 62.8 lei in August. The medium salary on economy accounted for 1,341.7 lei in September, by 3.5 lei less than the precedent month.

In particular, the average salary paid to employees of financial sector declined by 755 lei in September, down to 2,892 lei. The average wage of doctors and social assistants dropped by 48 lei, down to 996 lei, while doctors earned 878 lei, by 66 lei more than in August. The lowest salary in September was paid to farmers - 795 lei, by 91 lei more than in August. According to data of the Economics and Trade Ministry, salary arrears in real sector of economy turned over 132.2 million lei (10.5 million dollars) on July 1.

4. Moldova in the world

World Bank is becoming more generous with Chisinau...

The World Bank has approved a 9.8 million dollars Competitiveness Enhancement Project (CEP) for Moldova. The approved amount represents a 4.9 million dollars credit and a 4.9 million dollars grant. The credit is released on basis of conditions of the International Development Association (IDA) for a 40-year period, including a 10-year grace term, and a 0.35 percent preferential interest rate (in case of Moldova), compared with usual interest of 0.75 percent.

This project was worked out at the initiative of the Moldovan Government within the Economic Growth and Poverty Reduction Strategy Paper, and it aims to enhance competitiveness of Moldovan products through a better business climate, modernization of the national standards and quality MSTQ System, modernization of measurements, standards, testing and quality system, new equipment, facilitation of enterprise access to MSTQ services; facilitation of access to finance.

The total cost of the four-year CEP Project is 14.3 million dollars. In addition to the World Bank credit and grant, the Government of Japan will also finance the project. Since Moldova joined the World Bank in 1992, Bank commitments to the country total approximately 592 million dollars for 64 projects.

Transdnistrian Conflict

After a pause of 15 months, on 27-28 October the Transnistrian conflict resolution talks were resumed in Chisinau and Tiraspol. For the first time the talks took place in an enlarged format - the Moldovan and Transnistrian sides and the representatives of the mediators on behalf of the OSCE, the Russian Federation and Ukraine were joined by representatives of the US and the EU as observers.

The following key issues were tackled during the talks and in the comments made by the participants afterwards:

Organisation of free and fair elections in Transnistria. In the final protocol of the meeting, the participants appeal to the OSCE Chair in Office, Slovenian Foreign Minister, Dmitrii Rupel, to continue consultations with a view to deploying an international electoral mission under the OSCE aegis to make an assessment of the situation and provide recommendations regarding the organisations of democratic elections in Transnistria. The agreement of the parties in this matter was hailed by the participants as a key achievement of the talks. Dmitrii Tkaci, Ukraine representative at the talks, said that following the conclusion of the work of the international mission it will take about 240 days to organise elections in Transnistria. Thus, the elections could take place by the end of 2006. Both the EU and the US representatives saluted the parties' agreement regarding the organisation of free and fair elections, but said that for such elections to take place, a number of conditions need to be put in place, such as the freedom of the media and political pluralism.

The withdrawal of Russian troops and weapons from Transnistria. According to the participants, this was one of the most debated issues at the negotiations round, on which no agreement was reached. The Head of the OSCE Mission to Moldova, William Hill, told a press conference after the round that the process of withdrawal was disrupted due to the lack of political will of Russia in this matter and that it would take about six months to conclude the withdrawal. Valeri Nesteruskin, the Russian representative at the talks, said that the withdrawal was stopped due to the disruption of talks between the parties, a statement refuted by the Moldovan Reintegration Minister, Vasile Sova, who said that despite the disruption of official talks, the parties have continued to talk to one another all the time. Minister Sova also said that Moldova intends to propose that the issue of Russian weapons withdrawal is included in the agenda of the December OSCE Ministerial Summit in Ljubliana.

Security and confidence building measures. The sides agreed to start consultations on the package of documents "Control of weapons - confidence and security building measures" prepared by the OSCE in July 2005. This will involve, among other things, the exchange of information between the two sides on their armies and weaponry.

The situation in the security zone. According to the participants, the parties exchanged opinions on the situation in the security zone in the neighbourhood of Dorotkaia village, and on ways to unblock the activity of the Joint Control Commission, but reached no agreement. The Head of the OSCE Mission to Moldova expressed regret and said that the OSCE is very worried about the situation in the security zone.

The status of the Transnistrian region. According to the participants in the talks, this subject did not feature on the agenda. Thus, the Transnistrian settlement plan recently proposed by the Russian Federation was never discussed; the talks were led on the basis of the Ukrainian plan which had been accepted earlier by the parties in principle. In his statements for the press, the Russian representative at the talks said that the new Russian plan is intended to supplement the Ukrainian one and that it will be proposed for discussion only when the parties are ready for a "constructive dialogue". In his turn, Minister Sova stated that the Moldovan side will not examine any settlement initiative that does not draw on the Ukrainian plan and the Law on the Basic Principles of the Status of Eastern Districts of Moldova, adopted by the Moldovan Parliament in July 2005.

The participation for the first time of the US and EU as observers in the negotiations was appreciated by all the participants as having had a positive effect on the round of talks. According to the Ukraine's representative, the presence of the EU and the US representatives in the room made the parties want to show more than ever that they are ready to reach a compromise.

The participants in the negotiations round have assessed the results thereof as "modest". The Head of the OSCE Mission to Moldova, William Hill, said that the talks were difficult because during the 15 months pause in the negotiations a lot of complex issues have accumulated. According to Hill, the main result of the negotiations round of 27-28 October has been the very fact of the resumption of negotiations.

The next negotiations round has been scheduled for 15-16 December.

Foreign Affairs

Moldova - E.U. joint actions

The European Union commissioner for external relations, Benita Ferrero-Waldner, has told the London conference of chairmen of committees for foreign affairs in E.U. member and candidate states that the E.U. assistance mission at the border between Moldova and Ukraine, which will start on December 1, will be a significant contribution to security of community bloc and an important step forward settlement of the frozen conflict in Moldova's eastern breakaway enclave of Transnistria. This mission will contribute to prevention of trafficking in human beings and smuggling, will obstruct proliferation of weapons and customs frauds by seriously hitting the incomes of the Transnistrian separatist government. Ferrero-Waldner considers that the mission at the Moldovan-Ukrainian border is also a component of the enlarging interests of E.U. in the former Soviet Union.

Speaking about Moldova-E.U. relations, the United Kingdom ambassador in Chisinau admitted that the E.U. "has arrived in Moldova too late, but European leaders have pledged to provide an essential assistance to new neighbours." The ambassador recommended the Moldovan authorities to implement a clear reform in mass media and press freedom sector, to charge illegal migration and to punish intermediaries of illegal visas.

The Moldovan Border Guard Service has recently received technical assistance worth more than 32 million lei as part of the Enhancing Border Control Management Programme financed by E.U. and UNDP-Moldova. The Enhancing Border Control Management Programme was launched in early 2005 to train border authorities, to reduce illegal migration and trafficking in drugs to E.U. member states.

Problems related to crossing of border with Romania

The conditions how Moldovan citizens will cross the border with Romania will be established by late 2005, as Romania will join the E.U. soon. It is presumed that the existing border-crossing regime will function until Romania's entry in E.U., with explanation of conditions for entry of Moldovan citizens in the neighbouring country.

Once Romania joins the E.U., it could introduce an asymmetrical visa system for Moldova similar to the existing system with Poland: Moldovan nationals will travel with visas issued by diplomatic and consular offices of Romania free of any charge, which will organise their activity so that to meet all objective applications.

Valeriu Ostalep, deputy foreign and European integration minister, said that Moldovan and Romanian authorities have recently discussed problems related to crossing of border by Moldovan nationals, who are told to present evidence regarding maintenance in Romania or special invitations. The situation regarding border crossing has become complicated because Romanian authorities, pressed by community authorities, apply all the 2002 governmental ordinances, which explain entry conditions for citizens strange to the E.U. area.

A recent survey carried out in Romania shows that 42 percent of respondents opted for respect for an E.U. decision that obliges Romania to introduce visas for Moldovan citizens; 23 percent did not warm this measure, with the risk to jeopardize relations with E.U; while 16 percent said that Romania must introduce visas even if the E.U. would not impose this measure.

Problems in economic relations with the Russian Federation persist

The Moldova-Vin Agency has announced that the Russian customs service has stabilised the process of issuing of customs stamps for imports of wine production from Moldova, after this process was blocked up "from technical reasons" for almost one month. The Russian customs offices issued about 7 million stamps to Moldovan businesses on October 17-27, and supplies will continue under a normal regime this year.

On the other hand, Moscow said that Russia could introduce shares for importation of alcohol production from Moldova, and the Chisinau authorities describe this action as "a black PR against Moldovan wines."

Nor the exports of agricultural production from Moldova to the Russian Federation were relieved until now, though Russian Agriculture Minister Alexei Gordeyev has recently promised "to get involved in the problem of imports of agricultural production from Moldova starting November 7, after he completes his trips." He promised to the Moldovan agriculture minister "to study this problem and to comment later." The Russian Federation stopped the imports of agricultural production from Moldova last spring, and Russian officials had early said that the situation would be relieved by the mid-October.

Energy assistance from neighbouring countries

High-ranking officials from Romania and Ukraine have told the recent joint sitting of secretaries of the Supreme Security Councils and heads of Information and Security Services from GUAM, in Chisinau, that their countries could supply electricity to Moldova in case of need. A representative of Romania said that his country "would resist to blackmail of Moldova in this vital issue for state security."

Studies, Analyses, Comments

Electoral polygon
Igor Botan, 9 November 2005

New elections for vacant mayoral offices will take place in 13 localities of Moldova, including the Chisinau municipality, on November 27, 2005

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Economic growth of conjuncture
Iurie Gotisan, 9 November 2005

President Voronin has recently attended an ordinary cabinet sitting and bitterly criticized the executive, indicating in particular the low quality of economic growth, lack of initiative and poor execution discipline

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