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Activity of Public Institutions

Parliament
Government
Presidency

A branch of "orange evolution"? by Igor Botan
Gas is coming from East by Iurie Gotisan

Activity of Public Institutions

Parliament

1.1. Appointments. Immunities

• A sitting of the commission for the national security, defence and public order has decided to appoint Deputy Speaker Iurie Rosca to head a subcommission in charge with supervision of activity of the Information and Security Service (SIS). The subcommission, created in response to one of conditions that the Christian Democratic People's Party (PPCD) has imposed in exchange for the election of Vladimir Voronin as chief of state, also includes Deputy Speaker Maria Postoico and lawmakers representing all parliamentary factions.

• Lawmakers representing the majority faction of the Moldovan Party of Communists (PCRM) could not give green light to a demand of the prosecutor-general seeking the withdrawal of immunity from their party fellow Ivan Gutu because the other parliamentary factions refused to participate in the voting. Only 51 out of 56 PCRM lawmakers approved this demand, while the legislation says that the immunity can be withdrawn with the secret vote of the majority of elected parliamentarians. Under a ruling of the Constitutional Court, this majority consists of at least 52 lawmakers in Moldova. Ivan Gutu pleaded innocent before the secret voting and described the actions of the prosecutor's office as late and contradictory to legislation in effect. The procedure of withdrawal of immunity started after opposition representatives have sought information regarding the perspective to examine this appeal of prosecutor-general submitted last summer, as PCRM lawmakers gave green light to demands on withdrawal of immunity from three parliamentarians representing the Our Moldova Alliance opposition faction and accepted the delivery of penal causes filed against these persons to the court.

1.2. Legislative documents

• Law for the modification of legislative documents on entry and exit from Moldova. Under the law, foreign citizens and stateless persons who enter Moldova for maximum 90 days will be recorded through their inclusion in the state population register while crossing the border.

• Law on the Red Book of Moldova. It will regulate social relations on protection, use and restoration of species of rare or disappearing plants and animals included in the Red Book, in a move to prevent the disappearance of such species and to ensure the conservation of their genetic fund.

• Law for the rectification of the 2005 state budget. This legislative document approved a rise of revenues by 469 million lei and distributed expenditures of over 275 million lei. The budgetary surplus will be used to finance new laws on salaries in budgetary system.

• Law on mandatory health insurance funds. The price of an insurance policy will grow up to 816 lei, while employees and employers will pay by 2 percent of salary every month. The law obliges the Government to introduce an automatic information system in public medical-sanitary institutions. This measure will strengthen the record and will relieve doctors from issuing many documents for record of patients and provided health services.

• Law for the modification and completion of the law on protection of competition. The law establishes new regulations on activity of the national agency for the protection of competition, status, rights and competences of this public institution.

• Law for the modification of the law on Chamber of Auditors. The law introduces new regulations on status of chamber members, stop of their mandate and institutes the possibility to conduct inspections at the demand of any parliamentary faction.

• Law for the modification of the Election Code. The law establishes the possibility to introduce maximum five alternate candidates in the lists of candidates for elections in local councils, compared with two bidders stipulated by the Election Code.

• Law on the adhesion of the Republic of Moldova to the Optional Protocol of the Convention on the Elimination of All Forms of Discrimination Against Women. The protocol stipulates the recognition by signatory parties of competence of the committee for the elimination of all forms of discrimination against women to receive, analyze and formulate recommendations to member states on basis of communications, including secret, transmitted by persons or groups or persons who consider that their rights established by the Convention on the Elimination of All Forms of Discrimination Against Women have been violated.

• Law for the amendment of the law on making and circulation of ethyl alcohol and alcohol production. The law allows the sale of ethyl alcohol and alcohol production confiscated by inspection bodies that fit the necessary standards to businesses holding licences in the area, as raw material.

1.3. Parliamentary control

• The first sitting of the parliamentary subcommission for supervision of SIS activity outlined the need to improve the legislative framework that regulates the status of SIS officers and the procedure of cooperation of this service with parliamentary structures in charge with inspection in the area. The subcommission decided that SIS "focus on consequences of the Transnistrian conflict, which affects the political and economic situation, including the energy condition of the Republic of Moldova." The subcommission members will attend one of next SIS sittings, will visit the headquarters and territorial subdivisions of SIS, in order to study the situation regarding human resources, technical endowment, state of headquarters, finances needed to ensure the national security.

• The commission for foreign policy and European integration has heard the Interior Ministry regarding contribution to the implementation of the Republic of Moldova-European Union Action Plan. The ministerial report focussed on development of normative base, but lawmakers said that this is not enough. Parliamentarians invoked a number of shortcomings in activity of police bodies, including:
  • the high crime rate in the country;
  • administrative measures aimed to reduce the number of offences;
  • the use of torture and inhuman treatments by police;
  • insufficient measures against trafficking in persons;
  • corruption in the system and insufficient training of staffs.

  To note that the 1990 law on police and most of related orders are old and a new law based on modern principles of activity of security and public order services is needed. Also, surveys indicated one of the highest corruption rates in the police and this state of things continues.

• The commission for human rights, with the invitation of civil society representatives, has heard reports of governmental authorities regarding the implementation of the action plan on human rights for 2004-2008. The commission members described the actions of the Ministry of Culture and Tourism, Ministry of Information Development, Justice Ministry, public broadcasting company TeleRadio-Moldova, and the Supreme Court of Justice as insufficient. Parliamentarians described the reports as superficial, without a real coverage of the state of things. Officials of the heard institutions motivated the shortcomings through short financing of state structures, so that it cannot cover all the measures stipulated by the action plan on human rights.

• Lawmakers heard a report on activity of the Labour Inspection in 11 months within the hour of the Government. According to the report, the inspection conducted 5,700 controls in 11 months of 2005 and registered more than 56,000 violations, while the most frequent breaches are: the failure to pay the salary in the established size; the use of labour force without an individual labour contract or its inappropriate issuing; the failure to issue labour cards; the violation of time of work or rest; the failure to pay indemnities for over-programme work; the insufficient organisational measures in the labour protection area (lack of medical examinations, lack of normal conditions, individual protection equipment, use of uncontrolled technical mechanisms, etc.). In 2005, the inspection has already registered 113 accidents at work. Seventy-five of them were grave, 38 persons died (including two minors), while 84 persons were injured. Labour inspectors applied sanctions of over 400,000 lei. Lawmakers criticized the activity of the Labour Inspection, especially for execution indiscipline and lack of promptness of employees, who do not take effective measures, in order to obstruct the reduction of income tax on payment source and hiding of real salaries. Also, they indicated the lack of cooperation between Labour Inspection and fiscal services and regional social protection bodies.

• Parliamentarians heard a report on the implementation of the Millennium Development Objectives (MDO) presented by UNDP-Moldova Mission head Bruno Pouezat and the director of the Institute of Public Policies (IPP), Arcadie Barbarosie. The U.N. representative said that the objectives established by Government till 2015 can be fulfilled, but they are very ambitious. Pouezat recommended legislators to monitor the implementation of objectives within MDO, in particular, to monitor the use of public money and money coming from outside of the country. The IPP director said that most of objectives stipulated by the national report MDO for Moldova will not be fulfilled, if the present development paces continue, though a clear conclusion can be made later, after a certain period of implementation.

Interpellations

• Deputy Speaker Iurie Rosca has solicited the prime minister to report on the present organisational-legal form of newspapers Moldova Suverana and Nezavisimaya Moldova to the parliament, after the Government has withdrawn its quality of founder of these publications. Also, Rosca demanded the premier to confirm or to deny the speculations that these papers are part of a future holding along with a TV channel, several radio channels and other publications.

• Democratic lawmaker Vladimir Filat has asked the Economics and Trade Ministry to report on measures related to the forthcoming entry of Romania in the European Union and imminent negative consequences of abrogation of the free exchange agreement between the Republic of Moldova and Romania under these conditions.

Government

2.1. Reshuffles

The Government has proposed the recalling of Dumitru Croitor from the posts of Extraordinary and Plenipotentiary Ambassador of the Republic of Moldova to the Swiss Confederation, Permanent Representative of the Republic of Moldova to the United Nations Office in Geneva. Croitor was elected governor of the Administrative Territorial Unit of Gagauzia in 1999, but he tendered his resignation on summer 2002, after many pressures of the central administration and police forces in the region. He was nominated as ambassador to Switzerland in autumn 2002. Elections for the Gagauzian governor post are scheduled for 2006.

2.2. Decisions

• Decision on the approval of the draft law prolonging the action of the law on privatisation programme for 1997-1998. The decision that approves the project proposes the extension of implementation of this law until 2006. We note that the privatisation programme, which should be completed in early 1999, has been prolonged for many years, while the first term was increased three times. This programme contains a list of more than 650 objects, including the largest state-owned enterprises: S.A. Moldtelecom, S.A. Tutun-CTC, S.A. Aroma, S.A. Franzeluta, energy enterprises (RED Nord, RED Nord-Vest, CET-1, CET-2), and others.

• Decision on the approval of the draft law on processing of personal data. This draft proposes the introduction of regulations on protection and automatic access to personal data of Moldovan citizens, including data from identity documents, on payment of taxes, estate, etc.

• The Government has decided to recall the draft law on taxation of real estate on basis of their market price from the Parliament. The gradual taxation on basis of the price of real estate estimated after re-evaluation by cadastral offices was expected to be introduced on January 1, 2006. However, the Government has proposed the reduction of this tax 15-fold because this measure increases the real estate tax very much. However, the Parliament described these measures as insufficient and considered that the executive and competent authorities are not prepared enough to implement the new taxation system, so that the introduction of this tax was postponed. These changes became known for quite a long time, talks on this topic started last summer and, therefore, a normal questions appears: why the Government did not consult the public opinion and legislators before initiating drafts that produce negative and controversial reactions. On the other hand, it was said that owners of luxury real estate oppose the introduction of the new taxation system, as they would have to pay high enough taxes, if the present taxation rate is maintained, but on basis of the market value of their estate. The situation regarding transactions with real estate remains unclear at this stage, while taxation of these transactions takes into account the market value, they would increase the budget collections and collections of notaries, and would reduce the real revenue collected from owner. However, cadastral bodies continue to issue documents on residual (balance) value of private real estate.

• National programme on ecological agri-food production and action plan on its implementation. Under the programme, the legislation will be drafted and implemented in 2006-2010, normative documents will be adjusted to international requirements, a system of inspection and certification of ecological agri-food production will be organised. Model farms will be created at the first stage and the system of ecological agri-food production is expected to be organised there. The farms will receive logistical assistance, will benefit from preferential bank credits and will be exempted from land tax for conversion period, will benefit from direct subsidizing from the state budget. It is expected that more than 30,000 tons of ecological agri-food products be sold in 2006 after implementation of planned measures, and these products must account for about 75,000 tons by 2010.

• National action programme on priority actions for the improvement of situation regarding traffic security till 2008. The Government has prolonged this programme by taking into account the state of things in this area - the rise of the number of traffic accidents (by 5-18 percent a year, and 2,120 accidents were registered in 2005), considerable growth of the number of victims (366 persons in 2005, while the European average is seven-fold lower). The programme will be completed with chapters seeking the introduction of a control system on highways through modern information technologies, better training of motorists, rise of sanctions for certain violations, etc. To note in the context that this findings come after the radical reorganisation of activity of traffic police was announced, aimed to reduce the number of personnel, to attest the staffs, to limit controls, etc.

• Decision on approval of the draft law on beekeeping. The draft proposed by Government contains a series of regulations on this sector and aims to support the development of this sector, to ensure a qualitative and ecologically clean bee production. Moldova has more than 87,000 bee families at present. It produces about 2,000 tons of honey a year and exports only the third part of production (about 700 tons). The main problems of beekeeping include the lack of sale market, lack of specialised testing laboratories, high prices of prophylaxis medications. However, the sector is constantly developing, while the number of bee families rose by 34 percent in the past four years.

• Decision on awarding of some fields to the Metro Cash&Carry Moldova Company. Five hectares of agricultural land in the administrative-territorial territory of the Chisinau municipality have been awarded for construction of a new Metro market. The enterprise benefits of the ownership right, but it will have to recover the losses related to exclusion of fields from categories of agricultural land (losses estimated at about 260,000 dollars) and to erase the fertile stratum of soil from the surface of attributed field. The Government Decision does not mention the price of this field. However, the commercial price of a hectare of field in the Chisinau municipality is estimated at over 100,000 dollars.

2.3. Sittings. Decisions

• A Moldovan delegation headed by first Deputy Premier Zinaida Greceanii has negotiated the supply of natural gas to our country with the Gazprom concern administration in Moscow. According to reports, the sides did not reach a final agreement regarding the price of Russian gas for Moldova, but agreed that it will grow up to the "medium European level" (the Russian concern administration had earlier estimated the price of 150-160 dollars per 1,000 cubic metres). The sides discussed issues related to payment of Moldova's debts to the Gazprom concern.

• Prime Minister Vasile Tarlev has convoked a working sitting on situation of the thermo-energy complex of Chisinau. The presented information shows that the financial and technical situation of thermo-energy stations is complicated because of very high crediting debts, pressing needs of modernisation, which would reduce the cost price of electricity. The executive chief ordered heating generation and distribution enterprises in Chisinau to unveil own modernisation concepts within one month, while the Ministry of Industry and Infrastructure was told to study and to table proposals on implementation of these concepts within two months.

• Moldovan Premier Vasile Tarlev considers that it is premature to speak about visible results of the European Union's border monitoring mission to Moldova and Ukraine. He told a TV programme that "more than 170 carriages loaded with metal have left the Ribinta-based metallurgical plant for abroad without identity documents or constitutional customs specimen since the launch of this mission till the mid-December." The explanation of this situation is that the decisions of Moldovan and Ukrainian Governments on regulation of exports of goods are not implemented.

• The Economics and Trade Ministry has examined the draft national employment programme for 2006-2008, which aims at small business development through favourable economic premises capable to create jobs, to attract investments, to upgrade the industry and to provide finances for implementation of policies on labour market. According to forecasts, territorial employment agencies will register more than 60,000 job seekers a year, and less than half of them (23,000-25,000 jobless people) will be employed. According to the project, the state will subsidize new jobs in real sector of national economy (tourism, handcrafting, small business, patent-based entrepreneurial activity). According to the governing programme, central and local public administration authorities must create more than 300,000 new jobs by 2009.

• The Republic of Moldova has signed electricity supply agreements with Ukraine and Romania. In the context, Prime Minister Vasile Tarlev said that own electricity production capacities of Moldova have increased up to 35 percent of the overall consumed energy. The goal of the Government is to produce electricity in Moldova that would cover about 90 percent of needs in 2008-2009.

• The Government decided to ban the transportation of passengers by reassembled automobiles starting January 1, 2006. Automobiles which provide passenger transportation services and hold licences for a period longer than the established date will continue their activity until expiration of licences (1-2 years). The more than 200 minibuses travelling in the Chisinau municipality will be substituted by 500 buses and trolleys that the municipality will gradually acquire. The interdiction will affect owners of minibuses travelling on urban and interurban itineraries, as most of existing vehicles are reassembled and adjusted to passenger transportation requirements. The envisaged subjects do not warm this ban, saying that the vehicles have been reassembled at specialised enterprises which hold licences and they did not recover their investments so far. Supporters of this interdiction indicate the need to ensure the traffic security and to relieve the busy traffic in the Chisinau municipality.

3. Presidency

3.1. Decrees

Vladimir Voronin has signed a decree on appointment of Petru Railean, former chairman of the Central Election Commission (CEC), as judge of the Economic Court of the Republic of Moldova. Before being appointed as CEC chairman, Railean had run the Economic Court, but this post remains vacant until the Superior Council of Magistrates proposes a candidate to the Moldovan president.

3.2. Sittings. Statements

• The Moldovan president has expressed dissatisfaction with the outcome of the OSCE summit in Ljubljana, which failed to pass a decision on the Transnistrian problem despite of the insistence of the Moldovan diplomacy. The Russian Federation disagreed with formulations of the draft declaration, which was obliging it to pull out illegal armed forces from the Republic of Moldova and Georgia.

• Vladimir Voronin said while on a working visit to the Dubasari district that Moldova could review the principles of participation in the Transnistrian settlement negotiations, if no agreement on the problem of farmers from the Dubasari district, who do not have access to their own land controlled by separatists, is reached and it would start direct negotiations with the Russian Federation. Voronin asked the reintegration minister to seek the inclusion of this issue in the agenda of the forthcoming round of Transnistrian settlement negotiations, saying that direct negotiations with the Russian Federation will be needed in case of refusal because the separatist leaders "are marionettes of some groups of interests from the Russian Federation." The chief of state reiterated the previous statements that all the influence exerted through higher gas, electricity prices, stop of imports of agricultural production will not make the Moldovan authorities cede in the Transnistrian settlement process. In order to contribute to settlement of economic problems of localities in the Dubasari district, Vladimir Voronin recommended the drafting of proposals "on institution of an international free economic zone." It should be noted in the context that representatives of Russian authorities had earlier stated to mass media that they would not respond to tries of Moldovan authorities to tackle the problem of dismissal of the acting Transnistrian leaders directly with Russia.

• The Moldovan president told the national council for the economic development and poverty reduction that the poverty rate has declined four-fold in the past four years. At the same time, he announced that 75 percent of population earns less than needed for minimal consumption. Under these conditions, a consistent implementation of the Economic Growth and Poverty Reduction Strategy Paper (EGPRSP) is needed, as well as more attention to accomplishment of pilot projects in three districts of the republic regarding granting of social assistance in dependence of the level of real revenues of citizens.

Economic Policies

1. Economic year 2005 - preliminary evaluations

Economy is on the continued rise...

Although preliminary final data are unavailable, it is sure that the economic growth pace will make 2005 a special year in the evolution of Moldovan economy and any spirit must recognise this thing, no matter how critical it is. We had a very good agricultural year, with a rich crop of cereals. Also, the industrial production rose by 9.1 percent (truly, in January-September 2005, but the trend will continue the entire year). However, this growth pace will unlikely be maintained.

...while inflation could meet governmental forecasts...

Inflation could fit the limits of 8-10 percent forecasted by government for 2005, but we will be able to report about this only at the beginning of the year, when preliminary data for the entire year will be available. However, the inflation rate in November was 1.9 percent, while the CPI (Consumer Price Index) for 11 months of this year was 8.5 percent.

Though exports rose, they are little competitive...

Exports have grown, but they remained little competitive, while imports exploded after the rise of the internal purchase power. As a result, the trade deficit is on the rise. The consumption is based on credit and imports, while constructions developed mainly on money of Moldovans who work abroad. The consumption boom and declining interests on deposits have a negative impact on domestic savings.

...while key areas for long-term growth are underfinanced...

On the other hand, we have key areas for long-term growth which are much underfinanced (research and development) and we have phenomena with perverse effects (consumption, low interests on deposits, etc.), phenomena which affect the quality of economic rise.

...due to lack of structural changes...

Indeed, almost nothing has changed from structural point of view. The agriculture remained as undeveloped and extensive as before, massive imports have a negative impact on the deficit of current account, while as regards constructions their financing is sporadic, rather than programmatic and sustained, and it depends on the international labour market in a big measure.

2. Business environment

Business environment was marked by both accomplishments and by failures in 2005...

We attended a series of business roundtables and forums. The meetings discussed with the government the future of investments and private sector in Moldova. Businessmen tabled concrete and judicious proposals such as adoption of a law on protection of competition, mainly for protection of domestic market of non-qualitative imported goods.

Forecasts for business in 2006...

If Moldovan firms do not focus to enhance the productivity in 2006 and in future, they will face serious problems: the rise of productivity must be our goal. This should be one of strategic priorities of Moldova in 2006. At the same time, Moldova must also increase its capacity to absorb funds, in order to increase the capacity of absorption of funds. It is limited and results from the fact that we cannot define clear investment projects at this moment.

3. Privatisation

Privatisation developed slowly and defectively...

The transparency of privatisation worsened in 2005. The example of the Cojusna winery is meaningful in this context, as the plant was privatised after a long period of secret negotiations. The fact that conditions of the privatisation contract are not made public, rather than the proper privatisation, raises concern: price, obligations of investor towards salary earners, schedule of future investments.

In general, we must say as regards privatisation that what has happened in the past years was rather a sale of state-owned assets at counter because few objectives of privatisation have been fulfilled. We mean the optimisation of exploitation, improvement of living standards, creation of jobs, etc.

Bank system will have to review its crediting policy...

Year 2005 for banks in Moldova was a period when the savings was blocked. As for example, the savings in banks in October declined visibly compared with crediting and this difference continued in November. This is a dangerous trend that banks will have to stop early next year. On one hand, the competition says that if we want to release better credits, we must lower the interests and offer more attractive interests for deposits on spring, in order to attract savings.

4. Labour market

Massive migration of population continued in 2005 as well...

The intense migration of workers abroad continued in 2005, too. However, the unemployment rate rose though the phenomenon of intense migration of population to other countries was predominant this year as well, and this seems to be a paradox.

It may be presumed that a large part of population in rural areas faces a hidden form of unemployment; this is what we may name "rural overpopulation". The marginal negative efficiency in agriculture would be the economic interpretation of this overpopulation.

Although many people in villages cannot use their capacity of work appropriately, the cost of making a job and cost of life in cities make them stay in rural areas. Youths try their chances by migrating to the urban environment, holding the opportunity to obtain a higher professional education.

There is also the alternative to leave for work abroad; this opportunity is used by many citizens due to the very high difference of salary that compensates the costs of move to other country; a strictly economic analysis of cost-benefit favours the external migration in most of cases.

5. Agriculture sector

Taxation in agriculture...

The agriculture sector did not enjoy much assistance from the state this year as well. Even more, agricultural producers often complained that the state undertook many fiscal experiments on fields and finished production. We consider that the consolidation of family farms should be the priority of year 2006 and for future in general. We cannot tax them before encouraging them, especially because subsidies for agriculture are insignificant in 2006.

Like in other cases, the success of a fiscal measure (we mean the introduction of a 20-percent VAT for agricultural production in the 2006 budget) depends on how the tax is applied. If the VAT is increased for the farmer from market who sells 2-3 kilograms of apples from his own garden, we will see social tensions rather than larger budget revenues.

The taxation of agricultural fields is meaningful because the land has an economic value. However, this tax must not be higher than the capacity of many farmers to pay taxes - in agriculture of sustenance. However, taxation of production which is not sold on market (self-consumption) is much more than disputable.

Transdnistrian Conflict

The negotiations round of 15-16 December 2005

On 15-16 December, in Chisinau and Tiraspol took place a new round of negotiations on Transnistria in the format "5+2", attended by representatives of the Moldovan and Transnistrian parties, mediators on behalf of the OSCE, Russia and Ukraine, and observers on behalf of the US and the EU.

The participants in the talks adopted a final protocol, which states that by the next round the OSCE will prepare a draft mandate for the international assessment mission to evaluate the situation in Transnistria in view of organising democratic elections there; the Transnistrian side will provide full information regarding its troops and weapons in accordance with the package of draft documents on confidence building measures and security presented to the two parties in July 2005 by the OSCE; participants addressed a request to the OSCE Chairman-in-Office to deploy to the region an international mission to monitor the Transnistrian military-industrial complex; participants discussed the situation in the security zone regarding which the OSCE made a number of recommendations to the parties. The next round of talks was scheduled for 26-27 January in Tiraspol and Chisinau.

According to the Head of the OSCE Mission to Moldova, William Hill, it was "very difficult" to achieve agreement on all issues discussed, but certain results were achieved, which is "better than nothing". According to Hill, the most debated was the situation in the security zone, in particular the one near the Dorotkaia village. The OSCE Mission prepared a series of proposals regarding the freedom of movement of goods and people, the utilization and cultivation of agricultural land, the functioning of customs and police check points etc., which the mediators and the observers recommended to the two parties. The situation will be re-examined at the next round of talks, upon which a special working group will be created to look at the situation further. Likewise, the parties could not reach an agreement regarding the setting up of an international assessment mission to evaluate the situation in Transnistria in view of organising democratic elections in the region. The parties only agreed that the OSCE Mission will prepare a draft mandate for the mission until the next negotiations round.

The talks started on the same day when the Russian and Ukrainian presidents made a joint statement on Transnistria. According to the statement, the Russian Federation welcomes the Ukrainian initiatives on Transnistria, and Ukraine regards as "substantial" the latest Russian proposals on the margins of those initiatives. Russia and Ukraine reaffirm their support for all agreements on Transnistria reached to date, and state that the sustainability of any agreed solution will need to be ensured through a complex mechanism of guarantees. The two Presidents mention the stabilising role played by the current peacekeepers and consider opportune to transform it into an operation of peace guarantors under the OSCE aegis upon the settlement of the Transnistrian conflict.

The statement was not commented upon officially by the Moldovan side, but was called by the Moldovan Reintegration Minister Vasile Sova an "interference" in the internal affairs of Moldova. According to the electronic magazine Kommersant.ru, which quotes Moldovan governmental sources, the Moldovan side is unhappy with the statement because it confirms the intention of the Russian Federation to grant the 1,500 troops stationed in Transnistria the status of peacekeepers, and then persuade the OSCE to let them stay in the region under OSCE aegis. This manoeuvre will allow Russia to declare that it has fulfilled its Istanbul commitments, but at the same time preserve its military presence on Moldovan soil.

The OSCE Ministerial Council in Ljubliana

The OSCE Ministerial Council taking place in Ljubliana on 5-6 December ended, for the third time, without having adopted a Final Political Statement, due to Russia's refusal to include in the final text a clause stating the lack of progress in the Russian troops and weapons withdrawal from the Transnistrian region of Moldova.

In his final statement, the OSCE Chairman-in-Office, Slovenian Foreign Minister, Dmitrej Rupel, stated that "most ministers stated the lack of progress in 2005 in the process of Russian forces withdrawal from Moldova" and that "the ministers reaffirmed their shared determination to promote the fulfilment of these commitments as soon as possible to open the way to the adoption of the Adapted Treaty on Conventional Forces in Europe". We would like to remind that the Treaty has been ratified by only four states- Russia, Belarus, Ukraine and Kazakhstan. All other signatory states have conditioned the ratification of the Treaty by the complete and unconditional withdrawal of Russian troops and weapons from Moldova.

The Russian Foreign Minister, Serghei Lavrov, told a press conference after the OSCE Council that Russia attaches little significance to the Council's failure to adopt a final declaration. Lavrov explained Russia's refusal to sign the final document through the presence of a number of "unacceptable" clauses related to the ways of solving the Transnistrian conflict. Lavrov also stated that Russian had fulfilled all its commitments related to the CFE Treaty by withdrawing from Moldova all relevant equipment. The weapons that are still in the region will be withdrawn when the "right conditions" are in place, meaning the resumption of the negotiations on Transnistria.

Observers in Chisinau have deplored the OSCE Summit failure to adopt a final document, but noted that Moldova had achieved a symbolic victory at the Summit due to the universal consensus that existed among the participating states, except Russia, regarding the principles of solving the Transnistrian conflict, and the need for the unconditioned withdrawal of Russian forces from Moldovan soil. At the same time, the Russian veto on the final document and its conditioning of withdrawal through the "right conditions" have revealed a tougher and more assertive Russian foreign policy, which seems to be applying to the Transnistrian problem as well.

Elections to the Transnistrian "Supreme Soviet"

On 11 December in the Transnistrian region took place the so-called elections to the region's "Supreme Soviet", elections that have not been recognised by the international community. The elections were held in the best of Soviet traditions in an atmosphere of holiday, ordered by the Transnistrian authorities to ensure the 25% validating voter turnout. For the 43 "deputy" mandates ran 179 candidates, mostly representatives of two key electoral blocs - the pro-Smirnov movement "Respublica" and the movement backed by the big businesses from the region "Obnovlenie".

According to Olvia-press, little over 50% of the approximately 400,000 registered voters participated in the elections. The deputy mandates were won by 23 candidates from "Obnovlenie", 13 candidates from "Respublica" and 7 candidates from other socio-political movements and independent candidates. 27 deputies from the old legislature were re-elected, including the "perennial" Supreme Soviet Chairman, Grigori Maracuta.

The deputies elected on behalf of the winning bloc "Obnovlenie" are mostly representatives of big financial-industrial circles from the region, including the Firm "Scheriff" and the Metallurgical Factory from Ribnita. These have been reportedly the main losers from the economic restrictions imposed by the Moldovan Government on Transnistrian businesses in August 2004, and, as such, some of the most interested stakeholders in finding a compromise on the status of the region. The movement controlled 17 out of the 43 deputies in the former parliament, and its leader, Evghenii Sevciuc, is known to be the author of a number of modernising initiatives such as the constitutional reform, the legislative initiative to turn the Transnistrian official TV into a public company, and the campaign to dismiss the former "Justice Minister" Victor Balala.

At the same time, the two political movements, although promote different interests, did not show their differences too much, and have equally pleaded for the international recognition of Transnistria and the fortification of its "statehood".

As a political intrigue of the electoral campaign lacked, the break away authorities concentrated all their efforts on achieving international recognition of the elections. Thus, according to official statement, dozens of observers from the CIS, Israel, Poland, Ireland, Moldova etc. monitored the elections and stated unanimously that the elections were free and fair.

The Moldovan authorities did not recognise the ballot, which they called a new undemocratic "electoral farce", out of line with international standards. At the same time, the Russian authorities published a communique which stated that although elections were held in an unrecognised entity, the comments of observers and the media showed that elections took place in conditions a "genuine competitiveness" among the candidates and that no violations were registered during the voting process.

Foreign Affairs

The Republic of Moldova - Council of Europe

• The European Court of Human Rights (ECHR) has passed the 24th judgment sentencing the Republic of Moldova. This judgment is repeatedly taken on a case in which our country was already sanctioned early this year, but the authorities did not execute so far the court ruling on retrocession of a house nationalised in 1941 to plaintiff Serghei Popov, in compliance with a 1997 definitive judgment. First time, the ECHR had sentenced the Republic of Moldova to pay damages of 6,000 euros, while the recent judgment increased the compensation up to 7,000 euros.

• Observers of the November 27 local elections and December 11, 2005 repeat scrutiny on behalf of the Congress of Local and Regional Authorities of the Council of Europe (CLRAE) recommend the revision of the electoral legislation. In particular, they recommend the Moldovan authorities to establish a political consensus on the need to reduce or to annul the electoral threshold because the elections were invalidated because of absenteeism of population, though they were free and fair.

• The Committee of Ministers of the Council of Europe has approved a response to the recommendation of the Parliamentary Assembly of the Council of Europe (PACE) "on execution of obligations of the Russian Federation." According to the document, the Committee of Ministers made common cause with PACE regarding execution of obligations towards countries in the region, insisting that Russia respect its commitments, especially on withdrawal of troops from the Republic of Moldova. Also, the Committee of Ministers urged the Russian Federation to take all the necessary measures in order to release political prisoners Tudor Petrov-Popa and Andrei Ivantoc, in compliance with the ECHR judgment on this case.

The Republic of Moldova - European Union

• The European Union has annulled the travel restrictions for eight Transnistrian officials, which it introduced in 2004 for obstructing the activity of Moldovan schools. It still keeps the restrictions for two officials from the Ribnita city, who are involved in actions against Moldovan schools, as well as for 17 representatives of the self-proclaimed administration that the E.U. blames for halting a peaceful settlement of the conflict in the eastern breakaway enclave of Transnistria.

• A group of experts of the European Commission is expected in Moldova early next year to evaluate the state of electro-energy sector of the republic and possibilities of energy interconnection of Moldova with energy systems of neighbouring countries Romania and Ukraine. Experts of the European Commission will examine the state of the high tension lines Balti-Suceava and Gotesti-Falciu, as well as will estimate possibilities to build the 330-KW high tension line Balti-Novodnestrovsk (Ukraine), which Moldova wants to use in order to increase the capacity of importation of electricity from Ukraine.

The Republic of Moldova - OSCE

• The Moldovan foreign and European integration minister has warned that Russia's stance at the Ljubljana OSCE summit "harms the authority and image of the organisation." Expressing regret with the failure to adopt a declaration on Moldova, Andrei Stratan said that the democratisation and demilitarisation of the Transnistrian region are indispensable conditions for the conflict resolution and, therefore, the Russian troops must be unconditionally pulled out. In the context, the Moldovan diplomacy head sought the organisation of an international inspection at the Russian ammunition depots in the eastern region of Moldova and the monitoring of the military-industrial complex in the Transnistrian region.

• The E.U., NATO, U.S. and Romania have regretted the failure of the OSCE summit to adopt a document on Moldova. Delegations of the United Kingdom, Finland, Hungary, Slovenia, the Baltic Countries, Azerbaijan, Bulgaria, Denmark, Iceland, and Sweden backed Chisinau's stance on Transnsitrian problem. The Ukrainian delegation did not tackle the problem of the illegal military presence of Russia in the Republic of Moldova.

The Republic of Moldova - Romania

• Vladimir Voronin and Traian Basescu have discussed many issues related to bilateral and international cooperation within a visit to the Romanian capital on occasion of the opening of the Moldovan wine festival. The talks focussed on settlement of the Transnistrian conflict, institution of the international monitoring on the Moldovan-Ukrainian border, resumption of the Transnistrian settlement negotiations in a larger format. The sides found out that the actions taken in this area "did not register evident progress" so far. Basescu assured Voronin of Romania's full support, including in settling difficulties related to excessive rise of gas and electricity prices.

• Moldova's wine exports to Romania rose about three-fold in 2005, compared with the similar period of 2004. Moldova exported wine worth about 900,000 dollars to Romania in the first ten months of this year (the supplies turned over about 295,000 dollars in 2004). The Moldovan authorities hope to increase very much the wine exports to the neighbouring country the next two years, so that Romania rank the second place after the Russian Federation in the list of importers of Moldovan wines.

The Republic of Moldova - Russian Federation

• The Russian Federation considers "illegal and counterproductive" the correlation between ratification of the Adapted Conventional Forces in Europe Treaty and fulfilment of commitments that it had assumed at the 1999 Istanbul OSCE summit. According to officials of the Russian foreign department, the Russian-Georgian and Russian-Moldovan agreements on withdrawal of the Russian ammunition and military bases from these countries "have a bilateral nature and do not generate any obligations of Russia towards third countries."

• The Republic of Moldova will support Ukraine's entry in the World Trade Organisation, while negotiations with the Russian Federation "will go on." Officials of the Economics and Trade Ministry said that the Republic of Moldova is actively negotiating with the Russian Federation and consultations envisage (commercial-economic problems," especially on "indirect exportation duties after principle of destination country."

• The Russian authorities are decided to increase the natural gas price for Moldova. Although no final price was established yet, the sides have agreed during a visit of a Moldovan governmental delegation to Moscow that the price be adjusted to the medium European level and this would mean a two-fold rise compared with the present tariff. The Russian side invokes "economic" reasons as official motives of higher prices, but most of experts and public opinion are sure of existence of a political component of the planned measure. It seems that the Moldovan authorities have solicited meanwhile some international organisations to help reducing the impact of new prices of energy resources and representatives of the International Monetary Fund replied that Moldova could be provided some financial aid. The aid could be provided to the National Bank of Moldova but only after an analysis of trade balance and balance of payments.

• The Russian Federation and Ukraine have signed a joint declaration in which they saluted the resumption of the Transnistrian settlement negotiations with the participation of U.S. and E.U. representatives. The sides confirmed their decision "to coordinate their practical measures aimed at a definitive settlement of the conflict," while the Ukrainian initiative in the area was appreciated as base that encouraged the resumption of negotiations and the recent proposals of the Russian Federation on implementation of the Ukrainian initiative "have a substantial nature." Russia and Ukraine consider that the stability of the settlement model must be ensured through a system of guarantees and propose the examination of the "possibility to turn the peacekeeping operation into a peace guaranteeing mission under the OSCE aegis."

Moldova in the world

Claudia Nolte, developer of a resolution on the Republic of Moldova that the German Bundestag unanimously adopted in 2004 and had a positive resonance on the European arena, has described the situation in our country in an interview with a Chisinau-based publication. According to the German parliamentarian, the democracy in Moldova is not "true" yet because fundamental freedoms and independence of public mass media is formal, while democratic culture has an insufficient level. Nolte sees the solution of Moldova's problem in reorganisation and modernisation of public services, education of a new generation of politicians to follow the rules of democracy accepted by Europeans.

Studies, Analyses, Comments

A branch of "orange evolution"?
Igor Botan, 21 December 2005

The political year 2005 was unquestionably a year of elections, both regarding number of elections and their impact on the social-political situation

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Gas is coming from East
Iurie Gotisan, 21 December 2005

The rise of the natural gas price is being discussed much but the topic has turned from a genuine rhetoric into practical actions

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