print version

Activity of Public Institutions

Parliament
Government
Presidency

Parliamentary consensus on current legislative activity by Sergiu Grosu
Wine crisis goes on... by Iurie Gotisan

Activity of Public Institutions

Parliament

1.1. Reshuffles

The Constitutional Court has validated the mandates of deputy of alternate candidates Ghenadie Morcov (of PCRM) and Efim Agachi (of PDM).

Under an April 3, 2006 Government Decision, Valentina Cusnir, lawmaker on behalf of the Christian Democratic People's Party, is appointed as deputy director general of the Agro-Industrial Agency Moldova-Vin. She will have to choose one of the two public offices within one month.

1.2. Legislative acts

• Law for the ratification of the Council of Europe's Convention on combat of trafficking in human beings. The document aims to combat the trafficking in human beings, to create a framework of protection and assistance for victims and witnesses, promotion of international cooperation.

• Decision on creation of the special commission for the elaboration of draft legislative acts on consolidation of local autonomy. The document is approved with the purpose to execute the schedule of legislative actions for fulfilment of recommendations from the Resolution and Recommendations of the Council of Europe, while the commission includes lawmakers representing all parliamentary factions, unaffiliated parliamentary groups.

• Law for the modification and completion of the law on Government (creation of the Ministry of Local Public Administration). The parliamentary majority has maintained its previous decision on creation of a new ministry, but it gave green light to a proposal of the chief of state to exclude the merger within the new institution of the present Regional Development Agency, this remaining a body in charge with implementation of national programmes on constructions, water providing and improvement of infrastructure. This structure will turn into the agency for construction and territorial development.

• Law for the modification of some legislative acts on customs. Lawmakers have passed in the second reading a draft law empowering the Customs Service to manage the origin certification system, to certify the origin of goods and to issue origin certificates for exportation of goods to the European Union for pay.

• Law on beekeeping. The document adopted in the second reading was completed with the participation of representatives of organisations working in the field and it establishes the principles of these activities. It includes a special chapter on stimulation of activity of beekeepers, exemption of some tests from taxes and possibility of annual subsidies, given the contribution of this activity for agriculture.

• Law for the modification and completion of some legislative acts on execution of judgements. The document stipulates the modification of the Code on Administrative Contraventions, of the law on police, law on entrepreneurship and enterprises, introduction of new regulations, resulting from enactment of the Moldovan Code on Execution.

• Law on exemption of works for technical expertise, prospecting, designing and restoration of the Curchi monastery from VAT. The document completes a list of objects reconstructed with donations of individuals and businesses, works exempted from VAT.

• Law for the modification of Article 69 of the Election Code. This amendment excluded Paragraph 2 saying that the Central Election Commission "may warn or fine the electoral competitors" for violation of the Election Code from Article 69. The exclusion was motivated through fact that this norm runs counter other legislative provision from the Code on Administrative Contraventions, which says that courts apply sanctions for violation of the electoral legislation. Also, it was invoked that the present legislation does not stipulate any sanctions for businesses, while most of those sanctioned are businesses (parties, mass media organisations, economic agents). It was not said during debates if the draft was supported by CEC and if it takes into consideration the related recommendations of the Council of Europe and OSCE/ODIHR¹.

• Draft law for the completion of some legislative acts on operative activity of investigations. The draft adopted in the first reading obliges providers of post and telecommunication services to allow competent bodies to access the transmitted information, other assistance and necessary information within operative measures of investigation.

• Draft Audiovisual Code. The document adopted in the first reading aims to regulate the relations related to production, broadcast and/or rebroadcast of programmes via radio and TV channels, as well as to control the activity of broadcasters.

1.3. Parliamentary control. Declarations

Hearings

The permanent commission for the public administration, ecology and territorial development has examined the findings of a control on implementation of water providing and sewerage programmes (in districts of Soroca and Stefan Voda and Balti municipality). According to information provided by working groups of the commission, the programmes approved for 2002-2006 have not been entirely implemented due to the lack of finances, while local councils of all levels did not work out and approve programmes for the period until 2015. The parliamentary commission has found out that some quality indicators of water from artesian wells in the districts of Soroca, Stefan-Voda and Balti municipality do not correspond to the drinking water standard.

The commission for the social protection, healthcare and family has organised hearings on problem of social protection of the child and family. Lawmakers have raised dissatisfaction in connection with the situation in the field and proposed to empower an institution only to monitor and control the execution of this legislative framework.

The minister of economy and trade has reported on results of negotiations with the joint stock society SA Gazprom to the Parliament regarding natural gas deliveries. Valeriu Lazar reconfirmed the signing of a temporary agreement for a 3-month term and a 110-dollar price for 1,000 cubic metres. According to the minister, there are premises for the maintenance of the present price of natural gas for a longer period, though there is no decision in this regard so far. Lazar confirmed that the Moldovan authorities have tabled some proposals to the Russian side, including on participation in investment projects, with the Moldovan legislation offering important facilities to investors from various fields, including energy.

Questions and Interpellations

• PPCD lawmaker Angela Arama has asked the electronic media watchdog CCA to study how broadcasting institutions based in the Chisinau municipality respect the decisions on change of names of streets and legislation on functioning of languages.
• Parliamentarian Igor Clipii has asked the Prosecutor-General's Office and the Justice Ministry to verify how legal are the statements delivered by the leader of the republican social-political movement Ravnopravie, Valeri Klimenko, at a news conference on March 22, 2006. According to Clipii, Klimenco's statements are attempts on sovereignty and independence of the Republic of Moldova and these facts require penal and administrative responsibility. According to an interpellation, Clipii has demanded information about legality of participation of military in reconstruction of the Memorial of Military Glory in the Chisinau municipality.
• Vlad Cubreacov, chairman of the parliamentary faction representing PPCD, asks the prosecutor-general and justice minister to provide information about causes of non-execution of a final judgment that obliged the local authorities of the Floresti district to give the notice needed to register the church Acoperamintul Maicii Domnului in the city of Floresti as part of the Metropolitan Church of Bessarabia. Problems related to this church have developed into a serious conflict between parishioners, religious authorities and local administration bodies.
• PDM Deputy Valentina Buliga has asked the Government to report on execution of the law on pay system for budgetary sector that the Parliament adopted on December 23, 2005 and should be enforced on December 1, 2005. The situation in all budgetary institutions indicates the non-execution of this law, non-payment of rises established by this law, with the Government delaying the enforcement from unargued technical reasons.

Declarations

The speaker has convoked a news conference dedicated to the 1st anniversary of the acting legislature. According to Marian Lupu, the main accomplishments registered in this period include the political consensus, promotion of national interests above party interests. He indicated among concrete measures of the legislative activity the adoption of the legislative programme for 2005-2009, of some amendments to legislation resulted from conditions of political partnership (law on Superior Council of Magistracy, law on Information and Security Service, Court of Auditors, Election Code), which have been adopted and implemented by late 2005." Lupu noted that the Parliament will adopt the law on religious denominations, the law on broadcasting by the end of the current session, will improve the legislation on local autonomy, justice and prosecutor's office, after an expertise by the Council of Europe. As regards the wine exports to the Russian Federation, the speaker said that the measures of Russian authorities have a clear political nature and they are not argued from technical or economic point of view. As regards the Transnistrian settlement, the stance of the Parliament is the one indicated by basic provisions of the special legal status of localities from the left bank of the Dniester river, with the "Chisinau authorities standing ready to award the widest autonomy to localities from the left bank of the Dniester river."

On March 30, PPCD parliamentarian Gheorghe Susarenco read a statement deploring the use of the notion "independent lawmaker" or member of a party that did not exceed the electoral threshold in the parliamentary practice, a practice that he regards as contrary to constitutional norms, Election Code and legislative acts in effect. According to Susarenco, independent candidates only are independent lawmakers, while deputies who succeeded to the parliament as part of a party that they have left meanwhile are "lawmakers" or "lawmakers who left the faction," while the use of the name of a political party that did not participate in elections besides their names is wrong.

The AMN faction has released a declaration concerning the violation of the rights of Opposition, manifested through restriction of the right to freedom of meetings. It said that AMN intended to picket the Parliament headquarter on April 4, 2006 and it submitted an application to the Chisinau City Hall, but the latter turned it down under the pretext of an official visit of a foreign delegation.

PDM lawmaker Dumitru Ivanov has launched a declaration demanding the revision of a decision of the Ministry of Education, Youth and Sport regarding the organisation of graduation examinations for schools in certain examination centres only. The lawmaker invoked dissatisfaction of parents, teachers and students, reduced possibilities of local authorities to carry all students.

AMN Deputy Alexandru Lipcan has read an interpellation concerning the profanation of national symbols and Romanian language by functionaries of some state structures - the state-owned railway enterprise of Moldova CFM. Lipcan mentioned that a "tricolour of the size of a trainload on which everybody is wiping the shoes is laid down" in a carriage of the train Moscow-Chisinau, while inscriptions in the official language are absent under the pretext of "an interstate agreement allowing the writing of documents on railroads in Russian language." The parliamentarian asks the CFM administration to withdraw immediately the tricolour material from all Moldovan trains; demands the Prosecutor-General's Office to investigate the profanation of the tricolour in Moldovan trains and to punish the guilty persons, while the Government was asked to study how CFM respects the law on functioning of languages spoken in the Republic of Moldova and to sanction the persons who are to blame for violation of this law.

Government

2.1. Reshuffles

The Government has proposed to recall Moldova's Ambassador to Uzbekistan Efim Chilari, who also holds the posts of ambassador to Tajikistan, Kyrgyzstan and India.

2.2. Decisions

• Decision approving the size of the single birth indemnity. Under the document, the single birth indemnity for every new born will account for 800 lei starting January 1, 2006, by 300 lei more than previously.

• Decision on allocation of finances. The Finance Ministry was told to allocate 500,000 lei from the reserve fund of the executive for execution of designing works for reconstruction of the holiday camp for children in the village of Romanesti, the district of Straseni, for a further location of the National Centre of Olympic Training.

• Decision on implementation of the programme on humanitarian aid including food products. The document was adopted with the purpose to implement the programme on humanitarian food aid presented by the International Partnership for Human Development (IPHD) of the United States, International Partnership for Development (IPD) and the Moldovan Medical Foundation, which calls for donation of food products to complete the daily ratio of kindergartens and schools in 2006. It establishes organisational measures for execution of the programme at local level, while the caches of foodstuffs and allocated finances are described as humanitarian aid and they are exempted from any conscriptions.

• Decision approving the nomenclature of free and pay-for services provided by State Weather Service. The regulation on mode of use of special means of the Weather Service is approved along with nomenclatures, but it contains an evasive formula - "the obtained means are used under conditions stipulated by normative acts in effect to hold statutory activities of the Service, including to cover expenses related to providing of these services.

2.3. Sittings. Decisions. Declarations

Implementation of mandatory health insurance

A sitting convoked by prime minister heard a report of the National Company for Health Insurance which says that the state will compensate the cost of policies for 1.5 million persons in 2006 and about one billion lei will be used for this purpose. Appreciating the activity in the field, the prime minister demanded the organisation of additional actions aimed to train medical personnel in order to eliminate ethic problems in relations between doctors and patients, for advertising of advantages of the mandatory health insurance system. Tarlev ordered competent bodies to study possibilities to include parents who look after 1st-degree disabled children, mothers of many children in the list of beneficiaries of state-financed insurance.

Concerns with consumption cooperation

Participating in the republican meeting of the Union of Consumption Cooperation Moldcoop, Vasile Tarlev described this sector as important for national economy, but criticised its slow modernisation. The government asked Moldcoop to contribute to recovery of the organised trade network in rural localities, direct acquisition of agricultural products, development of production sector and elaboration of a strategy on promotion of exports through cooperatist enterprises. The prime minister asked an urgent inventory of all real estate of consumption cooperation in order to enhance the efficiency of administration of cooperatist patrimony.

Speech at CEFTA meeting

Vasile Tarlev has attended a meeting of premiers of the Central European Free Trade Agreement (CEFTA), expressing the visions of Moldovan authorities within European economic cooperation by using possibilities resulted from participation of Moldova in regional initiatives in South East Europe, as well as from future modified CEFTA agreement for which Moldova is declaring its support a priori.

Moldova - E.U. Cooperation Council

Prime Minister Vasile Tarlev headed a delegation of Moldova participating in the meeting of the Moldova - European Union Cooperation Council in Luxembourg on April 10-11, 2006.

Vasile Tarlev sought the autonomous system of preferences in commercial relations with the E.U. at a meeting with Benita Ferrero-Waldner. The E.U. commissioner expressed readiness of the European community to contribute to Moldova's integration in regional structures and organisations, indicating the Central European Free Trade Agreement (CEFTA) in the context.

E.U. Council Secretary-General Javier Solana, E.U. high representative for foreign policy and common security, has confirmed during a meeting with Moldova's prime minister that the E.U. stands ready to assist the continuation of implementation of democratic process, securing of the Transnistrian section of the Moldovan-Ukrainian border and settlement of situation in commercial relations with the Russian Federation. Moldova was told to identify concrete fields where the E.U. could additionally help our country. The sides discussed the facilitation of visa regime for the Republic of Moldova, but no draft decisions in this regard are available and supported so far.

3. Presidency

3.1. Decrees

Vladimir Voronin has awarded the Civic Merit medal to certain functionaries working in public administration, Valerian Binzaru, directorate chief of the Finance Ministry; Maria Trischina, chief accountant in the Constitutional Court Secretariat; Nicolae Revetchi, adviser for the Edinet district chief, for long and prodigious activity.

3.2. Sittings. Meetings. Declarations

Wine export problem

Vladimir Voronin convoked a special sitting on April 4 that focussed on exportation of wines and other alcohol production to the Russian Federation, interdicted by Russian authorities. Taking part in the meeting were representatives of Parliament, Government, Moldovan ambassadors to the Russian Federation and Ukraine. The chief of state was told that these are no official documents to justify the decision restricting the sale of Moldovan wines on Russian market, with the consumer protection department invoking the presence of pesticides and heavy metals in Moldovan wines, but independent expertises do not confirm these claims. The Moldovan president proposed a civilised and argued dialogue at level of competent governmental structures of Moldova and Russian Federation, organisation of an international independent expertise of all samples of alcohol production exported to the Russian Federation. In addition, Voronin proposed measures to diversify sale markets for Moldovan alcohol production, firstly in Ukraine, and elaboration of some measures to sustain wine makers, including Russian investors who are massively present in Moldova's wine making industry.

The problem of suspension of wine exports was also discussed during a telephone conversation of Moldovan president and his Georgian counterpart Mikhail Saakashvili, evaluating the future coordinated actions of the two countries, aimed to normalise the state of things. Mikhail Saakashvili has invited Vladimir Voronin on an official visit to Georgia and the Moldovan president accepted the invitation. According to Russian media, Saakashvili left for China on April 10, while Vladimir Voronin is on a private visit to this country. It is presumed that the Moldovan and Georgian leaders discuss with Chinese authorities and businessmen the delivery of Moldovan and Georgian wines, after Russia has restricted their export and trading.

A new reorganisation of the Government's Apparatus

The president of Moldova has chaired a sitting on optimisation of activity of the Moldovan Government's Apparatus. According to the chief of state, the 5-year experience has demonstrated that the institute of adviser is the best way to organise the activity of the chief of state's administration, describing the reorganisation of the Government's Apparatus after the same model as opportune. Reorganisations in the Government's Apparatus shall contribute to a better direction of administration, introduction of new governing principles and methods, insurance of a deeper interaction between presidential advisers and advisers of prime minister. Voronin sought a strict discipline and quality of issued documents and orders, maintenance of control and permanent record of execution of governmental decisions (April 5, 2006). We note in this regard that the reorganisation of the Government's Apparatus is not stipulated express by strategy on local public administration reform, this document empowering the Government's Apparatus to take most of measures included in the plan on implementation of reform strategy. The Government's Apparatus was modified and reorganised more than once, followed by personnel cuts, while the most important are:

• passage from the post of "state minister" to the post of "director of the State Chancellery" (1999);
• reorganisation of the "State Chancellery" into "Apparatus of the Government" (2004);
• merger of some subdivisions of the Government's Apparatus (2005).

Experts of public administration consider that the organisation of the Government's Apparatus after the model of the presidential apparatus is not an efficient measure because the Presidency does not draft normative documents, analyses and other works that specialised structures in the Government's Apparatus perform, while competences of advisers for prime minister cannot be extended to coordination of activity of some ministries and central authorities and presidential advisers participate in these relations due to authority and permanent ties with the chief of state. The relying of activity of the Government's Apparatus on advisers for prime minister produces confusions (the apparatus is of the Government, not of the prime minister, while presidential advisers are of president) and would direct to an excessive politicising of this structure, instability of posts (under the law on public service, the investiture of new first-ranking officials leads to dismissal of advisers).

Visit to the Academy of Sciences

According to the presidential press service, Vladimir Voronin has visited the Moldovan Academy of Sciences with the purpose to collect facts "regarding the stage of implementation of his initiatives on renovation and modernisation of the supreme scientific forum of Moldova." Headquarters which are being renovated and completely reconstructed were visited with the purpose to locate new scientific libraries of ASM. The chief of state demanded the renovation and consolidation of the Institute for Protection of Plants and Ecological Agriculture, which plays a decisive role in developing ecological agricultural production.

Meeting with E.U. representative

Vladimir Voronin has described the European Union's support for Moldova's territorial integrity and national sovereignty as decisive at a meeting with Cesare De Montis, head of the European Commission Delegation in Chisinau. According to the chief of state, measures such as participation of the E.U. as observer of the negotiation process, creation of the Border Assistance Mission to Moldova and Ukraine, firm support for implementation of a legal customs regime for exportation of goods from the Transnistrian region, and others are essential elements for Moldova's reintegration. The sides have analysed the stage of implementation of the E.U.-Moldova Action Plan, with the E.U. ambassador expressing hope that the April 10-11 sitting of the Moldova-E.U. Cooperation Council will appreciated the positive results.

Visit of Latvia's President

Within a news conference after talks between presidents of Latvia and Moldova, Vladimir Voronin has thanked the Latvian authorities for supporting the process of adjustment of Moldova's national legislation to the E.U. standards, mentioning that the integration in the E.U. is an unchanging national option and strategy, this being the only way to develop Moldova and to transform it into a democratic state like other European countries. Vaira Vike Freiberga appreciated Moldova's European choice, but warned that the chosen way is not easy, but the results deserve the efforts.

Meeting with chairman of the Party of Communists of Kyrgyzstan

The president of Moldova has received Ishak Masoliev, chairman of the Party of Communists from Kyrgyzstan, lawmaker in the Kyrgyz Parliament. According to the presidential press service, Ishak Masoliev expressed interest for democratic reforms promoted by Moldova's Party of Communists, especially as regards the rights of opposition parties, as well as towards experience of cooperation of the Moldovan authorities with the Council of Europe. Vladimir Voronin has expressed interest for particularities of development of Kyrgyzstan, especially after major political events that happened in this country early last year.

Meeting with leader of the Yisrael Beytenu Party

Avigdor Liberman, Moldovan-born chairman of the party which ranked the 4th place at the elections in the Israeli Knesset, has visited Chisinau some days after the parliamentary elections in Israel. Meetings of Liberman focussed on economic, political and cultural cooperation between both countries and contribution of businessmen, representatives of the Moldovan Diaspora in Israel and of the Jewish community in Moldova to these fields. Under understandings, investment projects on agriculture and transportation industry of Moldova will be implemented soon.

Interview for Nezavisiamaya Gazeta

The Russian newspaper Nezavisiamaya Gazeta published an interview with the Moldovan president in its April 7, 2006 issue concerning the Moldovan-Russian relations, problems of interior and foreign policy of Moldova:

• the Moldovan authorities are concerned to restore monuments of Russian culture (Museum House A. Pushkin, Serpeni Memorial, Memorial of Victory in Chisinau, etc);
• the Russian language is protected by law in Moldova, it is a language of interethnic communication, all official documents are translated into Russian, the Parliament has sanctioned the status of polyethnic state of Moldova;
• the European integration vector of foreign policy does not damage Russia, which is an important part of Europe, while President Putin is a European president who returns the European mission of this country for Russia;
• the acting governance does not have phobias for NATO, but Moldova does not intend to join this structure;
• the Moldovan authorities agree with the 1997 Transnistrian settlement Memorandum;
• guarantees of properties in the Transnistrian region may be confirmed at bilateral Moldovan-Russian and Moldovan-Ukrainian level;
• the interdictions on Moldovan wine exports to Russia are forms of "political education" that determine adequate measures for diversification of export. Moldova's wines will return to the Russian market, but in a higher price section, with a guaranteed European quality;
• the official visit of Moldova's president to the Russian Federation is being prepared, but this visit shall result with important and irrevocable decisions.

Economic Policies

1. Prices and inflation

Inflation rate was 4.8 percent in the 1st trimester of 2006...

The inflation rate rose by 1.5 percent in March while the cumulated rate in the 1st trimester of 2006 was 4.8 percent. The Consumer Price Index (CPI) for food products rose by 1 percent in March, manufactured goods by 0.8%, while tariffs of services for population grew by 3.2%. Significant rises of prices were registered for services provided to population, especially for gas tariffs. If the inflation rise paces continue the next period, the 10-percent governmental target for inflation could be exceeded.

At the same time, the International Monetary Fund (IMF) has warned in a report that high prices of fuels intensify discrepancies and risks of a world crisis. "Perhaps the world economic discrepancies will remain high as long as the fuel is expensive, increasing the risks of a sudden and disorderly adjustment", reads the IMF report.

2. Foreign trade

Moldovan exports rose by 2.3% only in January-February 2006…

Moldova's exports rose by 2.3% in January-February 2006. They totalled 158.1 million dollars. Food products, drinks and tobacco count for about 90 percent of the export, followed by textiles, vegetal products, electric machines and appliances, equipment, footwear, transportation units and materials, raw leather and leather, furs, etc.

How close is the danger of a crisis?

At the same time, imports rose by over 30 percent in the same period, compared with January-February 2005. Trade balance in the first two months registered a deficit of 171 million dollars and it was 1.7-fold higher than in the similar period of 2005. In particular, the high deficit was due to the rise of tariffs for Russian natural gas. Consequences of commercial relations (exports of Moldovan products to the Russian market) in the Russian section of Moldova could distort the country's economy more.

How close is the danger of a crisis? The uncontrolled long-term rise of trade deficit (and of current account deficit), of discrepancy between capacity of exportation and need of imported goods and services induces a risk. IMF representatives have indicated this risk more than once to the Chisinau authorities. The fear of IMF is of a medium and long term because Moldova's economy is open and dependent on exterior and everything is happening in regional and world economies influence us, too.

CEFTA - a proposal to join E.U...

Moldova's entry in CEFTA could improve the situation for exportation of Moldovan products and diversification of trade partners. Bucharest hosted a meeting of prime ministers of CEFTA member and candidate states, including the Republic of Moldova, on April 6. Indeed, this year Romania runs the chairmanship of CEFTA, which also includes members Croatia, Bulgaria and Macedonia, as well as candidates Albania, Serbia-Montenegro, the Republic of Moldova and Bosnia-Herzegovina. CEFTA (Central European Foreign Trade Agreement) was created by the Czech Republic, Hungary, Poland and Slovakia in 1992, while Slovenia, Romania, Bulgaria and Croatia joined the agreement the next years. The agreement was intended to replace CAER and to be an exercise, a form of preparation of states in Central and Eastern Europe for integration in E.U.

3. Financial-banking sector

Remittances via commercial banks exceeded 680 million dollars in 2005…

According to data of the National Bank of Moldova (BNM) remittances of Moldovans working abroad via commercial banks rose by 260.8 million dollars in 2005 compared with 2004, up to 683.24 million dollars. About 498 million dollars or 72 percent of remittances came via rapid money transfer systems. In addition, we should take into account the fact that money is introduced in Moldova via other means than those used by banks such as "transfers via bus", so that some analysts estimate the overall remittances at over one billion dollars. Independent and IMF and World Bank experts estimate that the volume of remittances could drop the next years due to reunification of families of those working abroad.

In 2005, the largest remittances via banking system came from Moldovans working in Russia and Italy - 277.4 million dollars and, respectively, 135.3 million dollars. Russia was the destination with largest remittances in 2005, as about 41% of remittances via banking system came from individuals working in this country. Remittances via banking system have permanently grown in the past years. Thus, they count for 89.62 million dollars in 1999, 152.94 million dollars in 2000, 211.99 million dollars in 2001, 254.12 million dollars in 2002, 317.29 million dollars in 2003, 422.41 million dollars in 2004, and 683.24 million dollars in 2005. This is a proof that the number of emigrants has grown in the part years.



Source: BNM and our estimates

4. Public finances

State budget revenues rose by over 15% in the 1st trimester of 2006…

The state budget revenues accounted for 2.089 million lei (160.5 million dollars) in the 1st trimester of 2006. They rose by 15.3% compared with the 1st trimester of 2005. The basic revenues are estimated at about 1.87 billion lei and they rose by 17% compared with the similar period of 2005. Expenses estimated at over 1.88 billion lei went from the state budget in the period concerned or by about 18% more than in January-March 2005.

The basic expenses accounted for about 1.65 billion lei and they rose by 21.2%. Most of them went to salaries of workers of budgetary institutions, pensions, lifelong indemnities and monthly state allocations for war invalids and participants in the World War II, scholarships, financing of capital investments, etc.

5. Business environment

EIU forecasts for Moldova are not very optimistic...

Analysts of EIU (Economist Intelligence Unit) for Central and Eastern Europe say that the main "follow-up" problems could delay unwillingly much the improvement of living standards in Moldova compared with the rest of Europe. The weak points are: inconsistent and fragile economic reforms, weak investment climate, poverty, legislation which is not adjusted to the E.U. norms, etc.

According to EIU, Moldova's progress cannot be faster than estimates mentioned below because the institutional development is modest, though it is trying to improve it, while the legislative system is faulty (despite tries to adjust it) and the demographic rise is completely unfavourable (forecasted population ageing rates are negative, while exodus of youths is strongly increasing) and there is an unhappy relation between growth pace of population and ageing. Thus, how Moldova's chances are seen from London?

According to EIU estimates, Moldova's economy will have a slower rise pace in 2006-2007 than in 2004-2005, while GDP could grow by 5.5% this year and by 5% in 2007. Finally, the internal demand could grow in 2006, too, while exports could remain at the level of 2005 or even decline a little bit. Exports will influence the general evolution of GDP in a small measure due to the rise of local consumption.

...while Fitch Ratings agency confirmed the rating for Moldova

At the same time, the international agency of financial evaluation Fitch Ratings has reconfirmed the Long Term Issuer Default Rating "B-" and the Local Currency Long Term Issuer Default Rating "B" for Moldova, while the Local Currency Long Term Rating was described as "stable". At the same time, Fitch Ratings has confirmed the Short Term Issuer Default Rating "B" and the Country Ceiling "B-". Thus, Fitch reconfirmed the rating for Moldova and the "stable" forecast for the second time.

6. Labour market

The number of job seekers dropped by 11% in 2005 compared with 2004...

The labour market registered some positive trends last year, as for example, the reduction of the official number of job seekers, while unemployment rate was 7.3%, compared with 8.1% in 2004. According to data of the National Labour Bureau, Moldova had 104,000 job seekers in 2005, by 11% less then in 2004. The unemployment affected men the most - about 58% of the total number of registered jobless people, and persons with residence in urban areas - 70% of the total.

...but official statistics do not offer a completely right state of things

At the same time, 85% of job seekers were experienced people. In addition, it should be taken into consideration that the unemployment rate in rural environment could exceed the official rate. At the same time, not all jobless people (or people without permanent jobs) are registered as job seekers, a situation that favours a lower unemployment rate. Many persons consider that if many workers did not emigrate, the unemployment rate would be higher. In 2005, job seekers benefited of allocations worth 489 lei on average. The unemployment allocation accounted for 482 lei in the first two months of this year. The employed population count for 1.318 million people in 2005 and remained at the level of 2004.

Transdnistrian Conflict

The customs regime at the Moldovan-Ukrainian border

By 3 April the new Moldovan-Ukrainian border regime, according to which only goods accompanied by official Moldovan customs stamps are being let in through the Moldovan-Ukrainian border, has been in force for one month. Ukraine's Deputy Minister of Foreign Affairs, Vladimir Handogii, stated within a briefing on 31 March in Kiev that the non-transparent schemes of goods turnover at the Moldovan-Ukrainian border are no longer functioning, and the goods smuggling is being prevented by Ukrainian border guard services. According to Handogii, the situation at the customs check points on the Transnistrian border segment is stabilising, and the tension is decreasing. At the same time, despite the interdiction by the Transnistrian authorities, more Transnistrian economic agents register with the Moldovan authorities and thus obtain the right to carry out import-export operations legally.

Although the number of contraband cases is decreasing, the problem of accumulation of contraband goods on Transnistrian soil destined to Ukraine and other states remains. According to some statements made by the First Deputy Chair of the State Customs Service of Ukraine, Alexandr Fiodorov, only in March on the Transnistrian segment of the border were registered 53 cases of contraband worth of 435,000 Ukrainian Grivnas (approx. 86.000 USD). Earlier, the Ukrainian President, Victor Yushcenko, told the Russian publication Kommersant Vlasti that the contraband at the Moldovan-Ukrainian border is worth about 200-250 million dollars, and the damage caused by it to the Ukrainian budget is worth 100 million dollars per year. According to Ukrainian and Russian media, in most cases the contraband consists of alcoholic beverages, poultry and other food products.

The problem of smuggling on the Transnistrian segment of the Moldovan-Ukrainian border was also touched upon by General Ferenz Bamfi, Head of the EU Border Assessment Mission. During a briefing held on 6 April in Kiev, General Bamfi stated that the situation at the border is under the full control of the relevant state bodies of Ukraine, however, the problem of contraband remains a topical one mostly due to the interdiction imposed by Transnistrian authorities on enterprises from the region to register in Chisinau. Despite this, 106 Transnistrian economic agents have registered permanently or temporarily with the Moldovan State Registration Chamber, and the EU Border Mission monitors the way in which these are being reimbursed the VAT, General Bamfi said, according to Infotag.

On the other hand, the Tiraspol authorities continue to maintain that they are being subjected to an "economic blockade" on behalf of Ukraine and Moldova, and the region's economic "ministry" claims that after 35 days of "blockade" the region has suffered losses worth of 89 million dollars. The statements by the Transnistrian authorities claiming that the region is on the verge of a humanitarian catastrophe have been rejected on a number of occasions by representatives of Ukrainian and Moldovan authorities, as well as those of the UE and OSCE. "There is no blockade> There is a self-blockade, because some cargoes belonging to the Transnistrian authorities are being let through. There is a "filtering" of interests", stated Ukraine President in his interview with the Russian Kommersant Vlasti.

At the same time, the Russian media has announced that Russia prepares another lot of humanitarian assistance for Transnistria, as well as financial assistance for the secessionist region. On 3 April, the official representative of the Russian Foreign Ministry, Mihail Kalminin, made a series of clarifications to the press regarding Russia's reasons for sending humanitarian assistance to Transnistria. According to Kalminin, what Chisinau is actually trying to do is to deprive Tiraspol of its main income sources, provoke a social crisis in Transnistria to change the current regime with whom it "cannot agree", and to "bring Transnistria under its own jurisdiction". "Russian people's readiness to help the elderly, children and all those in need should not be regarded solely as a humanitarian gesture, but first of all as univocal appeal to the leaderships of Moldova and Ukraine to align its actions to the general interests of preserving stability ...peace and calm in the region," Kalminin stated, according to the web site of the Russian Foreign Ministry.

Negotiations in the "5+2" format

The negotiations round planned for 4-5 April was delayed for an indefinite period, according to the OSCE Mission to Chisinau. The Head of Mission, William Hill, stated that the round has been postponed because of the contradictions that have emerged between the parties as a result of the introduction of the new customs regime at the Moldovan-Ukrainian border.

The Moldovan Reintegration Ministry published on 4 April a communique in which it states the need to resume the negotiations process and to continue the process of political settlement of the conflict.

On the other hand, on 4 April the Transnistrian secessionist leader, Igor Smirnov, stated within a meeting of the "inter-departmental anti-blockade committee" that "negotiations will not start until Transnistria is not given back the right to independent foreign commercial activity, as provided in the 1997 Memorandum.".

The Congress of "deputies" of all levels of Transnistria

On 31 March in Tiraspol took place the "sixth congress of deputies of all levels" of Transnistria, convoked at the initiative of the "supreme soviet" in connection with the "crisis" situation created as a result of the "economic blockade" of Transnistria by Ukraine and Moldova. According to Transnistrian media, the "congress" was attended by 660 representatives of "deputy soviets" of all levels. The "congress" was opened by the so-called "president" of Transnistria, Igor Smirnov, who, among other things, called Russia to pass from political statements to concrete actions to avoid the liquidation of the "statehood of Transnistria", which would be the purpose sought by Chisinau. The "congress" adopted a resolution, which proposes to organise a referendum regarding Transnistria's future relations with Moldova. According to the Transnistrian press, the referendum could take place at the same time with the "presidential" elections planned for December 2006 or even earlier.

Chisinau authorities said that if this decision is implemented, the results of the so-called referendum will have the same results as the other "polls" organised by the break away authorities - they will not be recognised neither by Moldova nor by the international community. Ukraine's Special Representative for the Transnistrian conflict, Ukraine Deputy Foreign Minister, Andrei Veselovski, qualified this decision as "provocative" for Ukraine. He refuted the statements made by the break away leader Smirnov that Ukraine's decision to apply the unified customs regime has been due to the interests of some Ukrainian officials and was taken in the context of the parliamentary elections in Ukraine. "This is not decision dictated by interests, it is a decision of Ukrainian Government, geared towards the recovery of a normal customs regime at the European borders", Veselovski said, quoted by Regnum.ru.

Foreign Affairs

Republic of Moldova - Council of Europe

The Committee of Ministers adopted two resolutions on March 28-29, 2006, demanding the Moldovan authorities:

• to adopt legislative amendments and to take measures needed to ensure the compatibility of national legislation on religious denominations with international standards in the field and recommendations of the Council of Europe;
• to insist on execution of the ECHR judgment on release of Andrei Ivantoc and Tudor Petrov-Popa, who are illegally detained by Tiraspol authorities.

The European Court of Human Rights (ECHR) has sentenced the Moldovan Government in the case Corsacov vs. Moldova for use of torture and ill-treatments, violation of the right to an effective appeal. ECHR has obliged the Moldovan Government to pay 20,000 euros in pecuniary and non-pecuniary damages to Mihail Corsacov, victim of police abuses, and 1,000 euros in costs and expenses. The use of torture is ascertained for the first time among applications of Moldovan nationals, while the lawyer of the applicant said that tens of such cases are being examined.

Republic of Moldova - European Union

Marianne Mikko, head of the delegation of the European Parliament in the E.U.-Moldova Cooperation Committee has spoken out regarding the state of the Moldova-E.U. relations and perspective to deepen them¹:

• the Brussels authorities consider that a successful integration of Moldova in E.U. is impossible for the time being because of poverty, migration, trafficking in persons, violation of human rights and Transnistrian conflict;
• although the legislation of Moldova is satisfactory, the implementation of laws is unsatisfactory because of the lack of qualified personnel, plenary political consensus, "opposition is influenced by Russia, and the Government is also influenced by Russia in a certain measure";
• Moldova has a civil society, serious NGOs, "but some of them are created to obtain financing only";
• the president of Moldova speaks so that to satisfy everybody, he has different speeches for the E.U., Russia and citizens;
• Moldova shall develop bilateral contacts with E.U. member states at level of legislation and parliamentary contacts, as well as at governmental level with all governments of E.U. member states. The European Community shall monitor how much money was spent on TACIS line and other programmes, how corruption is combated in Moldova, what is the situation of independent mass media.

Moldova's ambassador to the E.U. says that Romania's entry in the E.U. will facilitate Moldova's efforts to reach the same goal. Eugen Carpov considers that new perspectives will open to Moldova after Romania joins the E.U. while relations with E.U. will upgrade. The diplomat noted that the Moldovan authorities have started adapting the Romanian-language version of the E.U. legislation, while the Chisinau administration realises that the date when Moldova could be accepted as an E.U. member shall not be discussed in concrete terms at present.

Republic of Moldova - Romania

According to a survey conducted by the Romanian Centre for Sociological Analyses and Investigations CIVIS in March 2006, 51 % of Romanian citizens would vote for union with the Republic of Moldova, if a referendum in this regard is held. Also, 27 percent of Romanians would vote "for the maintenance of the present situation" and 10 percent would not attend the referendum.

Moldova's speaker says that our country wants to sign two treaties with Romania: the basic bilateral treaty and the border treaty between the two states. According to Marian Lupu, the ratification of these documents "would ease the settlement of the Transnistrian conflict." Lupu said that sensitive issues (national identity, language, history) shall be eliminated from relations between Romania and the Republic of Moldova for a certain period. On the other hand, Romania's foreign minister had earlier said that relations between the two states shall be based on a "partnership treaty for Europe" which would plan issues for future, no return "to the past insistently and without result" by promoting the idea of signing of a political treaty.

Delegations of the Information Security Service of Moldova and Security Service of Romania met in Chisinau to discuss cooperation and combat of risks for national security of states and regions in general. They discussed issues related to discovery of money laundering branches struggle against international organised crime, combat of extremism, separatism and terrorism.

Republic of Moldova - Russian Federation

Contract with Gazprom

A natural gas delivery contract was signed with the Republic of Moldova on March 30, with the joint stock society Gazprom accepting the present price for one more trimester. An official communication of the Russian giant said that the Moldovan authorities have tabled some proposals aimed at a wider collaboration, but they require a detailed examination and thus the current price for acquisition of gas was maintained.

Declarations by Russian Foreign Ministry

On April 3, the official representative of the Russian Foreign Ministry, Mikhail Kalminin, answered some questions regarding the granting of humanitarian aid to Transnistria. Mr. Kalminin claimed that Transnistria faces a situation of crisis after the Moldovan authorities have stopped applying some previous international agreements. He noted that the Chisinau authorities aim to deprive Tiraspol of independent sources that creates its budget, to challenge a social crisis in order to change the acting leadership of the breakaway region of Transnistria.

Moldova's ambassador in Moscow was invited at the Russian Foreign Ministry on April 4 to be told that Russian official statements regarding worsening of situation in Transnistria are based on the previous stance saying that the tries to make one of the conflicting sides to capitulate run counter the OSCE principles. According to Russian officials the problems shall be solved through political negotiations by taking into consideration the earlier agreed understandings, accordingly to the December 15, 2005 Joint Declaration of the presidents of Russia and Ukraine.

A representative of Russia addressed the April 6, 2006 sitting of the OSCE permanent Council regarding situation in Transnistria, invoking that the economic losses resulted from joint measures implemented by Moldova and Ukraine account for 75 million dollars. This situation has a negative effect on social sector, poorly ensured categories and the Russian Federation has sent humanitarian aid to Transnistria notably from this reason. According to the Russian official, the measures implemented by Moldova and Ukraine are tries to exert pressure on a conflicting side, while Russia as intermediary of the negotiation process is alarmed with this situation and impasse of the negotiation process.

Parliamentary correspondence

The Moldovan speaker has sent messages to the chairman of the State Duma and head of the Federal Council of the Federal Assembly, expressing concern with the situation after the interdiction of Moldovan wine exports to Russia. Marian Lupu called upon his Russian counterparts to contribute to revision of biased approaches and stances towards Moldovan wines by executive bodies. Heads of the parliamentary commissions for foreign policy, for economy, budget and finances, for agriculture and food industry sent similar requests to their counterparts.

Moldova's stance over Russia's admission in WTO

The head of the directorate general for commercial policies of the Ministry of Economy and Trade told a news conference on April 11, 2006 that the Republic of Moldova supports Russia's entry in the World Trade Organisation (WTO). Octavian Calmic said that Moldova is interested that the Russian Federation becomes a WTO member and complies with international rules in bilateral trade. According to the Moldovan official, international experts, U.S. and E.U. delegations estimate that Russia may join the WTO in late 2006 or early 2005, if it takes the necessary actions.

New conditions for entry in the Russian Federation and Moldova

A Protocol to the agreement on visa-free travel of Moldovan and Russian citizens was enforced on April 7, 2006. Thus, citizens of the two countries will be able to enter the foreign territory only on basis of passports and special documents issued by competent authorities (passport/identity paper of sailor, travel title for comeback to country issued by embassies). The introduction of new measures will improve the border control regime and will favour the combat of illegal migration, but it may also challenge some difficulties to citizens of Moldova who are in this country without a valid passport (earlier, Moldovan citizens could enter and leave Russia with identity cards).

Moldova in the world

The Moldovan Government intends to annul the visa regime for citizens of the E.U., the U.S., Canada, Switzerland and Japan on January 1, 2007. The executive hopes that this measure will give an impulse to tourism, will enhance the investments in Moldova. The need of such a decision is being discussed for a long time, being recommended by representatives of community institutions, too, while the executive did not make a clear decision in this regard but at the request of the chief of state. It should be noted that AMN lawmaker Vitalia Pavlicenco submitted a draft law in this regard to the Parliament in early March and the document proposes measures that the Government supports.

Studies, Analyses, Comments

Parliamentary consensus on current legislative activity
Sergiu Grosu, 11 April 2006

The second administration of President Vladimir Voronin turned one on April 4, 2006, a moment of reference for the following period which is named more often as "period of political consensus between some parliamentary parties"

»»»

Wine crisis goes on...
Iurie Gotisan, 11 April 2006

Although the Russian Federation's actions regarding exportation of Moldova's wine production are delighted in the "sanitary-epidemic field", as many officials of Moscow claim, we consider that the definitive elimination of some alleged suspicions regarding respect for quality and technical standards by Moldovan producers and exporters will be possible only when Moldova will implement the internationally recognised standards

»»»