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Activity of Public Institutions

Parliament
Government
Presidency

New concepts on foreign policy and national security by Igor Botan
Hedgehopping of Moldovan economy by Galina Selari, Anatol Gudim

Activity of Public Institutions

Parliament

1.1. Appointments. Reshuffles

The parliamentary commission for foreign policy and European integration has considered a proposal of the Foreign Ministry to appoint Lidia Gutu as Moldovan ambassador to Romania. The parliamentarian and chairman of the Social Liberal Party, Oleg Serebrian, member of the parliamentary commission for foreign policy, has informed the public opinion about examination of this issue. If the executive proposes candidate Lidia Gutu to the president and the chief of state appoints her to this post, her mandate of lawmaker will become vacant, while the next candidate in the list of the electoral bloc Democratic Moldova is a representative of the Moldovan Democratic Party and he will probably join this faction in the Parliament. It should be mentioned in the context that the Moldovan ambassador to Romania was recalled in December 2005 and there were many cases within bilateral relations when the post of Moldovan ambassador was vacant for a long time, in spite of mentioning the "priority and special nature" of relations between the two countries.

Alexandr Barbov, a journalist specialised in economics and politics who has earlier cooperated with the TV channel "Pervy Kanal v Moldove", the newspaper "Moldavsckye Vedomosti" and other online publications, was appointed as spokesman for the Parliament. The dismissal of his predecessor Alexandru Gisca was not motivated.

1.2. Legislative documents

• Law on insurance of equal chances to women and men. The document introduces a series of normative provisions, administrative and organisational measures for promotion of women and men under equal conditions, exclusion of discrimination on gender-related causes.

• Law on salary system in banking sector. The law was adopted in late 2005, but the president did not promulgate it and raised a series of objections and proposals that lawmakers have examined and took into consideration a part or all of them during the final examination of the document.

• Law on modification and completion of the law on leasing in agriculture. The law modified the provisions on administration of agricultural fields, establishes new conditions on mode of leasing of common fields.

• Law on modification of some legislative documents on state orders. By turning down a proposal of the president to extend the allocations for holders of the Stefan cel Mare orders, the Parliament has maintained its previous vote for this law through which it established monthly allocations of 500 lei for retired holders of the Soviet orders Hero of Socialist Labour, Labour Glory and the Order of the Republic.

• Decision on appointment of members of the interparliamentary commission of cooperation between the Moldovan Parliament and the Federal Assembly of the Russian Federation. The commission includes lawmakers from all parliamentary factions and independent parliamentarians.

• Decision on creation of the special commission to monitor the process of repayment of deposits of depositors of the Guinea Bank and Intercapital Concern. The commission will take over the functions of a similar commission created by the 15th legislature, which has contributed to the partial fulfilment of claims of depositors of these financial institutions.

• Law on ratification of some international documents. The Parliament has ratified the convention on safeguard of immaterial cultural patrimony, convention on creation of the European and Mediterranean organisation for protection of plants, protocol on stop of multilateral agreements signed with CIS, etc.

1.3. Parliamentary control

Hearings

Minister of Industry and Infrastructure has reported on situation in energy sector to lawmakers. Vladimir Antosii said that the economic indicators of energy enterprises are on the rise compared with 2004. In 2005, 143 localities were connected to the gas pipes, while the overall number in the republic is 614 establishments. As much as 250 million lei was allocated for construction of gas pipes from the state budget for 20005. The building of the thoroughfare pipe Tocuz-Cainari-Mereni, which will cover all the additional gas needs of the Chisinau municipality, districts of Ialoveni and Causeni, is a priority of gasification. Projects on insurance of energy from regenerating resources (solar energy, biomass energy, wind energy) were studied as alternative energy sources, but they would cover maximum 6 percent of needs.

The price that Moldova will pay to the Russian Federation after April 1, 2006, was not established yet, but the Government is trying to sign contracts on supply of gas from alternative sources from Kazakhstan and Turkmenistan. Representatives of the parliamentary opposition have demanded information about the imminent rise of natural gas price after April 1, 2006, but it was not confirmed or declined. Also, the need of a fair solution to the problem of ownership of the Moldova-Gaz enterprise on gas pipes, which are built with the financial support of population but are transferred under the balance of this business, was indicated. Representatives of the parliamentary majority have highlighted the need to speed up the construction of power plants, as well as of systems of interconnection with Ukraine and Romania. Also, the need to resume the electricity supplies from the Cuciurgan power station was outlined. It should be noted in the context that the parliamentary faction of PPCD has described the Government's agreement on transit of electricity produced by the Cuciurgan plant as an "economic complicity with the Tiraspol regime" and "violation of provisions of legislation that describe the privatisation of the state patrimony as illegal." In reply, a representative of the executive said that the Republic of Moldova could raise 6-7 million dollars from transportation of electricity produced by the Cuciurgan plant.

Questions and interpellations

• The speaker submitted an interpellation to the defence minister, saying that different companies have complained to the Parliament that they have not been admitted at a contest for auctioning of some fields of the Defence Ministry from artificial reasons. The defence minister was told to report on this issue at a plenary sitting of the Parliament.

• PPCD Deputy Gheorghe Susarenco has demanded information about individuals who own shares in the capital of the joint stock society Moldova-Gaz. The quota of these shares is about 1 percent of the overall number, but their financial value is very high.

• PDM Deputy Dumitru Ivanov has sought the intervention of competent authorities in order to help the residents of villages at the Moldovan-Ukrainian border in the Stefan-Voda district to be able to watch and listen to programmes of the national television and radio. Also, he sought information about interdictions of the Ukrainian authorities against duty-free transportation of small quantities of agricultural production by residents of villages from the border area.

• Deputy Iurie Bolboceanu has asked the Supreme Court of Justice and Prosecutor-General's Office to provide information on situation in the trade centre Gemenii, fraudulent involvement of high-ranking functionaries of Moldova and Ukraine in activity and litigations of these society, as well as about measures of authorities to stop these illegalities.

• AMN Deputy Veaceslav Untila has asked the Ministry of Culture and Prosecutor-General's Office to provide information about legality of demolition of the Conacul Urban Theodosiu building in the 160 Stefan cel Mare avenue in the Chisinau municipality near the Moldovan presidency headquarters in August 2005. This monument of architecture was destroyed without fulfilling all conditions stipulated by legislation in this regard, without being excluded from the register of monuments protected by state through a special decision of the Parliament. It should be noted that this problem was tackled four months ago at the first sittings of the Parliament in October 2005, proposing the creation of a parliamentary investigative commission, but the parliamentary majority turned down this initiative, saying that an appeal of the Prosecutor's Office on this case is enough for an initial elucidation of situation. The information of prosecutor's office on this case was not released until now.

• PCRM Deputy Valeri Garev has asked the executive to get involved and examine violations of the customs legislation by a number of businesses, signalled by a former officer of the Customs Service, whom the customs administration has pressured to tender resignation.

Government

2.1. Reshuffles

The Government has proposed to recall Victor Borsevici from the post of Moldovan Ambassador to China. Some members of administration of the OSCE Mission to Moldova are to be changed soon and heads of the Moldovan diplomatic missions to Sweden and the Czech Republic are to be appointed.

The executive approved the relief of Adrian Fetescu, deputy director of the Licensing Chamber from office. The cause of dismissal was not made public.

2.2. Decisions

• Decision on the approval of draft law on combat of family violence. The draft law proposes the introduction of some regulations aimed to improve the situation in the area by applying some interdictions against guilty persons, including the ban against aggressor to come to the work place or residence of victims and their children. Law enforcement bodies will keep a special record of guilty citizens, will visit periodically the victims of these actions and will provide the necessary assistance. According to developers, the implementation of this law would allow the elaboration of a complex statistical system about cases of family violence and would allow authorities to take concrete measures for its efficient struggle.

• Decision on approval of the draft law on exemption of some equipment imports from duties. The Government has worked out a draft law on exemption of water cleaning equipment and installations, biogas degasing installations used for complete reconstruction of the biological filtering station in the Chisinau municipality from VAT. About 300 million lei (some 23 million dollars) will not be collected to the budget after the exemptions. Also, the executive has established the list of technological equipment, equipment and circulating means in the area of science and innovation that will be imported without customs duties in 2006. According to preliminary estimates, the state budget will lose about 2.5 million lei (some 193,000 dollars).

• Decision on approval of draft laws on ratification of some international treaties. The Government proposes the ratification of the second facultative protocol to the international protocol on civil and political rights aiming at abolition of death penalty (adopted in New York on December 15, 1989) and ratification of the Protocol # 13 to the European Convention for the Protection of Human Rights and Fundamental Freedoms concerning the Abolition of the Death Penalty in all Circumstances (signed in Vilnius on May 3, 2002).

• Decision on allocation of financial means. The Government has allocated more than 42,000 lei to the Moldpres news agency from the reserve fund of the executive for payment of execution titles issued in line with a December 2004 judgment. It should be noted that the regulation on use of means from the reserve fund of the Government approved through the June 27, 1997 law # 1228-XIII establishes a list of destination of these means and the allocation of financial means for the needs of some state-owned enterprises is not established express in this list. On the other hand, the statute of Moldpres stipulates that the founder, the Government of Moldova, can cover financial losses from activity of the enterprise. The text of the document drafted by Government neither contain any details about the cause of sanctioning of this state enterprise, nor it says if these sums will be recovered through regress actions against persons who are to blame for eventual violations that generated judgments on sanctioning.

  Also, the Government approved on February 8, 2006 the members of a delegation and spending related to the September 21, 2005 working visit of the Moldovan parliament to Kiev, Ukraine.

2.3. Sittings. Decisions. Statements

• The prime minister has convoked a working sitting on execution of judgments of the European Court of Human Rights (ECHR) by Moldovan authorities. According to information released at the sitting, most of the ECHR judgments on Moldova have been executed, except for the Ilascu case, which cannot be executed "because of the international conjuncture," governmental officials said. Vasile Tarlev said that he assumes the responsibility for execution of all ECHR judgments, but "a legal framework on prevention of appeals of citizens to the European court" is needed because the Moldovan Government was sentenced for non-execution or late execution of rulings of national courts in most of cases. The premier considers that this situation can be solved through modification of legislation in order to "enhance the responsibility of officials whose actions can serve as ground for appealing to ECHR." The president of Moldova has earlier delivered statements in this regard, while the Parliament has tried to adopt an amendment to Constitution, which would set up a supreme national court of appeal, but the draft was turned down because of the lack of a consensus between the majority and opposition factions. At the same time, the legislation that would allow the recovery of estate or fair compensation of its value to victims of political reprisals was not modified until now and many appeals to ECHR are related to these actions of authorities.

• A roundtable examined the implementation of the e-Government Programme. According to studies by IT experts, there is a big difference between level of use of information technologies in central public institutions and institutions of local public administration. Representatives of the Ministry of Information Development in charge with implementation of the e-Government Programme said that the lack of necessary financial resources is one of main causes that halt its implementation. We note that the public system must be modernised and investments of public resources and of foreign investors should be used for this purpose.

• Prime Minister Vasile Tarlev intends to answer questions of citizens online every week. Thus, he said that a special column must be opened on the Government's website where citizens would be free to give questions. The prime minister backed the idea that a person in every state structure be in charge "with commenting some events at any moment or providing the solicited information to mass media at official level." Many experts expressed scepticism with implementation of this measure, as most of decisions and actions of public authorities come after repeated coordination, avoiding any information until an agreement of supreme decision-making factors. Also, the hiding of draft decisions of the Government, which should be easily published on the official website of the executive the way they are released on computers during sittings, is inexplicable.

• The Government intends to approve a special plan on "promotion of the real image of Moldova in the world." According to Premier Vasile Tarlev, this plan is needed because "the opinions about our country are too unilateral in the world, they do not correspond to reality."

• The Government has examined the implementation of its previous decision on free issuing of identity documents to Moldovan citizens from the left bank of the Dniester river. According to available information, about 45 percent of residents elder than 16 years in Transnistria hold new type of identity documents and they count for about 190,000 persons overall. It should be noted that more than 150,000 citizens held identity documents in the national passport system when this governmental decision was enforced in September 2005. Therefore, only 40,000 persons benefited of free documents within four months. It was earlier presumed that the low number of people who called on competent authorities has made the Government prolong the implementation of this decision by July 1, 2006.

• The Government has released a communique on functioning of the railway company of Moldova. According to the press release, the Government focuses on restoration of activity regime of the railway company of Moldova; it takes measures to solve this problem. The executive says that it is ready to cooperate with businesses and local public administration in the Transnistrian region, which are interested in restoring the unity of the railway. Under the August 2, 2005 Government Decision # 814 on awarding of basic guarantees to population in Transnistria, the restoration of unity of the railway company of Moldova guarantees jobs and salaries to all railway workers in the region.

  The complicated situation in the area of upright functioning of the railway company was generated by a decision of the Transnistrian authorities to take over the control on enterprises and communication ways in the railway system, blocking the traffic on some sections of railroad in the controlled territory. In order to eliminate the consequences of abuses and groundless blockings, the Moldovan authorities have decided to invest large financial resources in restoration of a section of railway, which allows trains to surround the territory controlled by separatists and the Revaca-Cainari railroad was put into operation in late 2005.

3. Presidency

3.1. Decrees

The President of Moldova appointed Petru Railean as chairman of the Economic Court of Appeal for a four-year term on February 2, 2006. This post was vacant the entire period when Petru Railean headed the Central Election Commission and the deputy chairman of this court has fulfilled the duties of ad-interim chairman.

3.2. Sittings. Statements

Meeting with representatives of security councils of Russia and Ukraine

The President of Moldova has received Yuri Zubakov, deputy secretary of the Russian Security Council, and Sergey Pirozhkov, deputy secretary of the National Security and Defence Council of Ukraine, and the sides examined issues related to the regional security in the Transnistrian settlement context. Zubakov and Pirozhkov told the meeting that their common visit to Moldova is "a continuation of approaching of stances and stable partnership between the Russian Federation and Ukraine as participants in the Transnistrian settlement process." The sitting examined problems related to mechanisms of destruction and withdrawal of ammunition and military hardware from depots in the Cobasna village, legalisation of Transnistrian businesses, monitoring of enterprises working in the industrial-military complex of the secessionist republic of Transnistria, with the participation of Russia, Ukraine and the OSCE.

Drafting of national security concept

A sitting convoked by the chief of state has approved the structure of the National Security Concept of the Republic of Moldova, containing references to dimensions, basic fields and objectives of activity of insurance of national interests of the country under present geopolitical and geo-economic conditions. According to participants in the sitting, the National Security Concept must become a fundamental document with support for all national strategies. The draft concept must be completed by late February.

Quality of health services

The chief of state has chaired a sitting that summarised the activity of the healthcare system in 2005 under conditions of the mandatory health insurance system. The main problems of the system are the deficit of staff, lack of medical services in a number of villages, need to optimise the management of medicine, improvement of situation in primary medicine. Vladimir Voronin insisted on a better quality of medical services, reduction of spending related to maintenance of buildings and other payments related to providing of health services, need to create a mechanism for a better use of allocations.

Enlarged college of Interior Ministry

Participating in a sitting of the enlarged college of the Interior Ministry, Vladimir Voronin appreciated the activity of police and their tasks for future. He insisted on the need to combat corruption, smuggling, economic crimes, to improve the staff policy, to enhance professionalism, legality of police actions, and cooperation between the Interior Ministry and civil society. The chief of state noted that crime leaders have changed their tactic, trying to legalise illegal sources, to invest money raised from different economic projects on illicit ways. On the other hand, he indicated the need to combat the association of former policemen and law enforcement agents with criminal groups. It may be presumed that the latest events, holding and investigation of managers of security agencies in Chisinau and responsible functionaries of the Interior Ministry are related to these statements of the chief of state.

Migration problems

A sitting with the participation of decision-making officials of the Government, Foreign and European Integration Ministry, services in charge with migration convoked by the chief of state has examined a series of problems related to respect for legality in the migration process. The president highlighted the importance of legal entry and leaving of foreign citizens at the state border of Moldova and noted that the legality of migration process is becoming current in perspective of negotiations with the European Union regarding the simplification of the visa regime with the E.U. members. It should be mentioned in the context that the Government has recently tabled a legislative initiative proposing the dissolution of the National Bureau for Migration as central authority subordinated to the executive, without presenting any clear argument of these changes, a fact signalled by parliamentarians who have also tackled this draft.

Interview with the radio channel Yekho Moskvi

Vladimir Voronin spoke out about developments in Moldova and Moldovan-Russian relations in an interview with the Moscow-based radio channel.

The Moldovan president described the Transnistrian conflict as a "conflict of interests" noting that there are structures in the secessionist region with branches in Moldova, Ukraine and Russia, which follow financial interests resulted from the annual "laundering" of about two billion dollars from production and sale of weapons, smuggling. Voronin considers that "impostors in Transnistria buy all those whom they need" with this money and this is the cause why the agreement on the new regime of transit of Transnistrian goods through the Moldovan-Ukrainian border was not implemented.

Speaking about the 2003 memorandum proposed by the Russian Federation, Voronin said that it was unacceptable because it was proposing a federation, while "Moldova lacks conditions for this purpose," while the Moldovan president could not sign a document capable to allow Transnistria to withdraw from federation and to become a recognised subject of international law. In this regard, the president noted that the issue of creation of a federation "could be solved with a majority of votes of parliamentarians, if the problem of open danger did not exist," but fell short of revealing the correlation of this decision with the constitutional norms (Art.142), which say that the orders on unitary nature of the state can be reviewed only with their approval by most of citizens included in the electoral lists at a referendum.

Voronin outlined the need to meet with Vladimir Putin and promised that Moldova will launch soon an initiative in this regard. Also, he regretted the collapse of USSR, said that that the communists in Moldova are of new style and they understand the mistakes of history and build their policy on modern social principles, through they contribute to installation of some monuments dedicated to Lenin, to functioning of organisations of komsomolists and pioneers in the republic.

Speaking about the filing of a new case against Valeriu Pasat regarding the attempt to overthrow the state power and to kill some political leaders, Voronin said that he does not hold official information, but the fling of a penal case "must be immediately taken to notice of the person concerned." He noted that the Prosecutor-General's Office is not obliged to communicate him all the cases it files and he does not collect facts on such matters. With a couple of days after this interview, representatives of the Prosecutor-General's Office confirmed the institution of new penal proceeding against Valeriu Pasat for usurpation of the state power and frame-up of an assassination.

Economic Policies

1. Financial-bank sector

Six Moldovan banks hold about 77 percent of overall assets of banking system...

The total assets in banking system accounted for about 35.5 percent in 2005 or by 6 percent more than in 2004 (29.5 percent). The assets of the banking system amounted to more than 18 billion lei (about 1.4 billion dollars) on January 1, 2006. This trend suggests that the inflows of new deposits and revenues were the main factor that fuelled the rise of assets. This is a proof that the banking system continues to demonstrate that it is one of the most dynamic sectors of economy.

The six large banks (Moldova-Agroindbank, Savings Bank, Victoriabank, Moldindconbank, Mobiasbanca, Banca Sociala) own worth between 1 and 4 billion lei. As a rule, Moldova Agroindbank is leader regarding the size of assets, as it owns assets worth 3.7 billion lei, followed by Savings Bank - 3.4 billion lei, Victoriabank - 2.08 billion lei, etc. The rest of banks oscillate between 160 million lei and 900 million lei. Mobiasbanca posted the highest jump of assets in 2005, as they grew by 73 percent and this institution climbed from the 6th up to the 5th place in the standing of banks. The assets of Savings Bank (in which the state owns 56 percent of the majority package) also registered a spectacular rise in 2005, 49 percent, while the assets of Energbank grew by 46.8 percent (see the diagram).

The Austrian group Raiffeisen International opened a representation in Chisinau via the subsidiary Raiffeisen Bank Romania in late January 2006. Domestic banks are not very happy of the presence of the Austrian bank, since it could overturn their financial "calculations" through some lower interest rates than on the system. "Slanderous tongues" in Chisinau say that the National Bank of Moldova (BNM) has informally opposed the arrival of Raiffeisen Bank on market, perhaps because the lobbying of big banks which does not warm some interests. One thing is sure: the arrival of foreign banks to Moldova's market would generate a true competition in the system and a strong rise of FDI (foreign direct investments).

Volume of bank deposits rose by 43 percent on average in 2005...

Also, one of basic indicators, the 1st-degree capital, rose by 437.1 million lei or 18 percent in 2005, up to 2,871.2 million lei. The evolution of this indicator contributed to consolidation of stability of banks in general. The share of foreign investments in the banking capital was 50.6 percent in 2005. It declined by 1.8 percent compared with 2004 and it was mostly due to higher investments of domestic businessmen than of foreign entrepreneurs.

Another two financial indicators, profitableness of assets (RA) and shareholder capital (RC), count for 3.2 percent and, respectively, 17.3 percent in 2005, and declined by 0.5 percentage points compared with late 2004. The decline was a result of higher rise paces of assets and shareholder capital compared to profit of banks. It should be mentioned that the latter, which is mostly raised from crediting activity, was influenced by reduction of afferent interests last year and this fact conditioned a firmer financing of economy.

The rise of deposits of individuals by about 42 percent up to 6.89 billion lei and of deposits of individuals by 45.4 percent up to 6.34 billion lei in the structure of assets, as of January 1, demonstrates an increasing stability of the banking system in Moldova.



Source: BNM and our estimates

2. Foreign trade

Moldova has smaller exports than trade deficit...

Statistics show that the foreign trade of Moldova rose by 23.5 percent in 2005, up to about 3.4 billion dollars. At the same time, a huge trade deficit of 1.22 billion dollars (estimated at over 40 percent of GDP) was registered. Indeed, Moldova has exports (which turned over 1.09 billion dollars in 2005) lower than trade deficit. It is interesting that alcohol drinks, food products and tobacco represent 36.3 percent of Moldovan exports.

Despite the phyto-sanitary and veterinary barriers of Russia, as well as the uncertainties related to commercial relations, this country ranks the first place. Moldovan exports turned over 347.52 million dollars, while imports from Russia amounted to 273.64 million dollars. Moldova exported goods worth 324.27 million dollars to the European Union, but imports amounted to 752.35 million dollars.

Moldovan exports to the E.U. could grow after Moldova's inclusion in the Generalised System of Preferences GSP+ on January 1, 2006. On the other hand, experts say that exports will develop slowly rather than will register a strong rise because they do not cover the products for which Moldova has competitive advantages, firstly the agri-food products. Moldovan officials are interested to obtain some Autonomous Trade Preferences stipulated by the Action Plan that Moldova signed with the E.U. in 2005.

Transdnistrian Conflict

Russian, Ukrainian security council representatives visit Transnistria

On 7-9 February 2006 a delegation of representatives of the Russian and Ukrainian security councils visited Moldova, headed by the First Deputy Secretary of the Russian Security Council, Iuri Zubakov, and the Deputy Secretary of Ukraine's Security and Defence Council, Serghei Pirojkov. On 7 February the delegation met with Moldovan President Vladimir Voronin. During the meeting the parties noted the importance of regional security aspects in the context of the Transnistrian conflict resolution efforts and tackled such topics as the mechanism of withdrawal and destruction of the Russian weapons from Colbasna, the mechanisms of legalisation of the activity of Transnistrian economic agents and the international monitoring of the Transnistrian military-industrial complex.

On 8-9 February the Russian-Ukrainian delegation travelled to Transnistria, where it visited the "Electromas" factory, "Litmas" factory, the Ribnita steel factory and the Russian weapons depots in Colbasna. "We have not found any evidence at the enterprises we visited and where we met with employees and employers that they produce weapons ", stated Iuri Zubakov at the concluding press conference in Tiraspol. Serghei Pirojkov said, in his turn, that Ukraine regards Transnistria as an important border area. "We want that people here, including the Ukrainians, are guaranteed the basic rights", told Pirojkov the press, noting that the application of the Yushcenko plan will allow for the removal of all obstacles to a normal life in Transnistria. According to Pirojkov, quoted by de Infotag, not all participants in the settlement process show "enough political will", and, as a result of this, certain "confrontational models" are being thrown out into the negotiations process.

According to the two officials, an international monitoring mission under the OSCE aegis is to be deployed soon to monitor the Transnistrian military industrial complex, which will have the final say on this subject.

The Transnistrian leader Igor Smirnov showed happy with the findings of the Russian-Ukrainian mission and said that after the mission under OSCE mission confirms that Transnistria is not dealing with the production and smuggling of weapons, the Moldovan leadership and President Voronin will have to apologise to the "Transnistrian people" for their false accusations and "black PR".

On the other hand, the Moldovan Reintegration Minister Vasile Sova said he did not regard the visit of Russian and Ukrainian Security Council representatives as a monitoring one, and will only comment the situation from the enterprises concerned only following an international mission under OSCE aegis, according to AP Flux. "The Russian and Ukrainian delegations visited these enterprises but we should in no way regard this visit as a monitoring one", said Sova further.

The issue of international monitoring of the military-industrial complex of Transnistria will be examined at the next round of talks in the "5+2" format scheduled for 27-28 February.

Unified Moldovan-Ukrainian customs procedures

Following suspension by Ukraine of the unified Moldovan-Ukrainian customs procedures, on 1 February in Odessa took place a round of bilateral Moldova - Ukrainian consultations regarding the application of unified customs procedures at the Moldovan-Ukrainian border. The talks lasted for many hours but ended with no results. The Moldovan Deputy Reintegration Minister, Victor Postolache, declared at the beginning of talks that the unified rules on passing of goods over the Moldova-Ukrainian frontier need to enter into force without changes, and if the Transnistrian economic agents want to really work, they will have to comply to Moldovan laws. Transnistrian representatives, on the other hand, insisted that Transnistria has the right to conduct international commercial business independently in line with agreements signed within the settlement process and that should the new customs regime enter into force a lot of Transnistrian enterprises will stop working and there will be a humanitarian crisis in Transnistria.

The Moldovan-Ukrainian consultations in this subject were to continue on 6-7 February, but were postponed.

According to the President of the State Registration Chamber of Moldova, Alexandr Ghiduleanov, quoted by "Vremea" newspaper, from 25 January 2006, when the simplified procedure of registration for Transnistrian enterprises entered into force, 16 Transnistrian economic agents registered provisionally in Moldova, including a number of big enterprises such as the Moldovan Power Station, the Ribnita Cement Factory, factories "Buchet Moldavii", "Moldavkabeli", etc. At present about 50 Transnistrian enterprises are registered in Moldova on a permanent basis.

President Voronin interview with "Eho Moskvi" Radio Station

On 4 February the Moldovan President Vladimir Voronin gave a lengthy interview to the Moscow-based "Eho Moskvi" Radio Station (www.echo.msk.ru), whose key subject was Transnistria. The interview has had a large resonance in Moldova due to a number of points made by the President on this and other topics. President Voronin noted that the conflict is not an ethnic, cultural or religious one, but rather a "conflict of interests" sustained by some deep rooted "criminal enclaves" which launder annually through Transnistria about 2 billion USD and which have ties in Chisinau, Kyiv and Moscow. These interests are the main impediment to the settlement of the Transnistrian conflict and this is the reason why the Moldovan authorities have requested the adherence of the US and EU to the negotiations format. Voronin has also blamed on these interests Ukraine's decision to suspend the application of unified customs rules that were to enter into force from 25 January. Asked about the reasons why the so-called Kozak Memorandum failed, Voronin said that the federative model envisaged in the memorandum was in breach of the Moldovan Constitution and was trap towards recognition of Transnistria. Speaking of the current Moldovan-Russian relations, President Voronin said Moldova wants "normal, good neighbourhood relations" and that "it would be quickest and most appropriate if we could solve the Transnistrian problem with Russia rather than seek support in various European and world [organisations]". "This would be a good foundation for new relations with Russia for many years ahead", said Voronin.

Foreign Affairs

The Republic of Moldova - Council of Europe

• The Committee of Ministers of the Council of Europe (CoE) has raised concern with the late complete execution of the 2001 ECHR judgment on the Metropolitan Church of Bessarabia vs Moldovan Government case. Although the Metropolitan Church of Bessarabia was registered after the ECHR judgment, the CoE considers that the authorities did not execute the entire judgment in terms of modification of legislation on religious freedom, with the purpose to avoid violations of the European Convention on Human Rights in future. The Committee of Ministers considers that the Moldovan legislation continues to offer a discretion to the government as regards the awarding, suspension or withdrawal of recognition of religious nominations and recommends the Moldovan authorities to speed up the adoption of a new law on religious dominations by taking into account the conclusions and recommendations of CoE experts. The Committee of Ministers will meet again in late March and will examine the stage of implementation of its recommendations, so that the Parliament should adopt and the President of the country should promulgate a new law on religious dominations in compliance with the CoE recommendations until then.

• The Republic of Moldova was obliged to pay material, moral compensations, juridical spending of over 345,000 euros in 24 trials that it has lost since its entry in the CoE and start of examination of appeals by ECHR. Most of judgments were passed in 2004-2005, and they envisage the unfair execution or execution of judgments of national courts in a longer term. Knowledgeable sources said that Moldova was sued in 151 cases until now and about half of them are related to non-execution of judgments.

The Republic of Moldova - European Union

• The Republic of Moldova has started negotiations with the E.U. regarding the inclusion in the list of beneficiaries of the Autonomous Trade Preferences of E.U. The general conditions needed to be fulfilled by Moldova in order to benefit of this regime will be established during negotiations and the attributions for issuing and management of origin certificates for exportation of products to the E.U. will be delimited. The Autonomous Trade Preferences regime has an increased level of liberalisation of exports to the European community and the E.U. can award it unilaterally.

• Franco Frattini, E.U, commissioner for justice, freedom and security, said that the European Commission is highly appreciating the stage of implementation of the Moldova-E.U. Action Plan, the dialogue on legal problems and interior affairs. According to the European official, the migration is one of problems that require more attention from Moldovan authorities and negotiations on visa regime will be possible after a solution to this issue.

The Republic of Moldova - Romania

• The Romanian mass media reported that the Foreign Ministry of Romania has drafted an action plan on introduction of visa regime for Moldova on January 1, 2007. According to the preliminary plan, the visa regime will bring a series of facilities: awarding of visa for very short terms, no consular fees, on basis of a minimal number of documents. Visa for maximum one year will be awarded to students, teachers, participants in cultural events, transporters and businessmen. Visa for large companies will be issued for maximum five years.

• The Romanian authorities do not have a clear stance on the process of awarding of Romanian citizenship to Moldovan citizens. Now the citizenship awarding procedure rests with the competence of the Justice Ministry, which has received at least 20,000 applications for citizenship, but it does not examine them for a very long time , with applicants waiting more than three years. No clear arguments on perpetuation of this situation have been officially unveiled, hinting that the rapid regaining of citizenship by Moldovans would halt Romania's entry in the E.U., but these affirmations lack a legal ground.

• The Chisinau authorities say that the modification of trade rules between Moldova and Romania in connection with the entry of the latter in the E.U. and suspension of the bilateral free exchange agreement will not reduce the circuit of goods between the two countries very much. The Ministry of Economy and Trade considers that about 75 percent of Moldovan goods could be exported to Romania under conditions close to the ones of the free exchange agreement due to Moldova's inclusion in the European system GSP-plus. The circuit of goods between Moldova and Romania exceeded 340 million dollars last year, with Romania registering a positive balance of 140 million dollars.

The Republic of Moldova - Russian Federation

• Russian Defence Minister Sergey Ivanov said that the Russian peacekeeping forces in Transnistria represent an element of stability for this region, since none of the sides involved in the Transnistrian crisis assumed any responsibility. He delivered such a statement to the security conference in Munchen, Germany, which has debated the problem of ratification of the Conventional Forces in Europe Treaty.

• Another Russian official, the deputy secretary of the Russian Security Council, Yuri Zubakov, said that Russian peacekeepers "exert their mission with dignity and we must think well about the need to change the format, so that not to run riot." The Transnistrian media has quoted Zubakov as saying that Chisinau's initiative to modify the format of peacekeeping operation "must be examined with maximal caution."

• The Moldovan authorities have promised to ensure the transit of electricity from the Moldovan Hydro-Power Station (CHM), which the Russian company Inter RAO EAS Rosii has recently bought, to the Balkan countries. A draft contract was already delivered to the Russian side and Minister of Industry and Infrastructure Vladimir Antosii said that the Moldovan side will "assist" the electricity transit process because CHM is unregistered with the competent bodies of Moldova and it does not hold certificates needed for conformity and customs declaration of exported product.

Moldova in the world

The Republic of Moldova and the International Monetary Fund (IMF) have decided to sign a preliminary crediting agreement worth 117 million dollars overall. IMF mission head Thomas Richardson said that this credit will be released to the National Bank of Moldova for maintenance of the balance of payments and currency reserves of the state, with the purpose to ensure a macroeconomic stability. The IMF Board of Directors is to pass a final decision on this agreement next spring. The new credit of IMF is expected to be released under a preferential regime, for a 0.5-percent interest rate, for a 10-year period and a 5-year grace period, while the transfer of means in instalments will be preceded by periodical estimation of accomplishments of Moldova's authorities. The resumption of the IMF financing is the main condition for restart of cooperation with other foreign financiers, with the Government targeting at many credits and grants that will be obtained by 2009. The previous programme with IMF was stopped in 2003.

The chairman of the parliamentary commission for foreign relations and European integration said that the Republic of Moldova will not participate in the CIS institute for monitoring of democratic development, consolidation of parliamentarism and respect for electoral right of citizens. This institute, which is being created in the CIS Interparliamentary Assembly, will have similar tasks as other international structures specialised in monitoring of elections, especially of the OSCE and CoE. Moldova did not invite CIS observers at the 2005 local and parliamentary elections, but it ratified the convention on standards of democratic elections, electoral rights and freedoms in CIS member states.

Studies, Analyses, Comments

New concepts on foreign policy and national security
Igor Botan, 15 February 2006

In compliance with the December 22, 2005 # 374-IV and January 16, 2006 # 414-IV presidential decrees, national commissions made up by high-ranking state officials are due to draft the national security concept and foreign policy concept of the Republic of Moldova by March 1, 2006

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Hedgehopping of Moldovan economy
Galina Selari, Anatol Gudim, 15 February 2006

While adapting to the "independence" and the market, already has been six years in a row (2000 - 2005) when Moldovan economy started show signs of growth, but neither government, nor business or population have any confidence in its sustainability

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