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Activity of Public Institutions

Parliament
Government
Presidency

Driving away from CIS by Igor Botan
Therapy of International Monetary Fund by Iurie Gotisan

Activity of Public Institutions

Parliament

1.1. Legislative acts

• Law for the completion of Article 22 of the law on veterans. The document stipulates monthly indemnities of 500 lei for retirees who hold the Stefan cel Mare Order (94 persons at present).

• Law on importation of a vehicle for special use. The law stipulates the introduction of a mobile television car made in 1994, donated to TeleRadio-Moldova Company by Norwegian Television, by derogating the provisions of the Customs Code and exempting it from duties for import rights.

• Draft law on the National Institute of Justice. The document was drafted at the insistence and recommendations of international institutions and aims to create and choose a status of this public institution, which will be in charge with training candidates to posts of judges and prosecutors, professional training of judges and prosecutors, and other law makers.

• Draft law on status and model of organisation of activity of clerks of courts. It proposes to establish a mode of succession to the post of clerk, his status, rights and tasks, obligations, activity, supervision of activity and responsibilities.

• Draft law on international legal assistance in penal matters. The goal of the law is to establish a mechanism for regulation of the Code of Penal Procedure on international legal assistance on penal matters, international treaties signed by Moldova. The law will be applied for transmission of manuscripts, data and information, communication of acts of procedure; summoning of witnesses, experts and investigated persons; transfer of criminal procedures; extradition; transfer of sentenced people; recognition of judgments of foreign courts, etc. A law on amendment of the Code of Penal Procedure was adopted in the first reading along with this draft, seeking the inclusion of a section of takeover and transfer of procedures in penal matters.

• Draft law on modification of Article 6 of the Law # 118-XV from 14 March 2003 on Prosecutor's Office. The document adopted in the first reading proposes a new editing allowing the prosecutor to contest an act issued by a public body in cases stipulated by law only, in interests of national security and public order, with the purpose to prevent disorder and offences, for protection of health and morality, protection of rights and freedoms of citizens. Under the effective law, any act considered illegal may be contested and the appeal of prosecutor suspends the action of the act contested before its examination by competent authority (the draft adopted in the first reading does not change the order on suspensive effect of the appeal, though it was contested by experts in the field of rights).

• Draft law for the modification and completion of the Law # 243-XV from 8 July 2004 on subsidised insurance of production risks in agriculture. It proposes higher administration expenses of issuer included in insurance premiums (from 10 percent up to 20 percent), of share of subsidy of insurance premiums (from 40% up to 50%, 60%). The Law # 243-XV in existing editing demonstrated its inefficiency: four economic agents insured themselves in 2005 (the insured amount was 5.8 million lei, subsidy from budget accounted for 90,000 lei), and 17 economic agents in 2006 (the amount foreseen in the budget for subsidising is 15 million lei).

• Draft law on fish breeding fund, fishing and canning of water biological resources. It proposes to establish a general status for water resources used for fish breeding, competence of public authorities in the field, mode of administration and management, economic implications, etc.

• Draft law on modification of some legislative acts (Penal Code and Code of Criminal Procedure). It proposes the introduction of some amendments needed to promote reforms in the field of juvenile justice, in line with international standards in the area. It calls for the reduction of the maximum detention terms for minors from 15 years down to 12.6 years; enlargement of the legal framework on use of educative restrictions, of institution of suspention of execution of punishment; use of unpaid work for community's benefit for a high number of offences, which require jail terms or fines at present.

1.2. Parliamentary control. Declarations

Hearings

The Ministry of Foreign Affairs and European Integration has tabled to the Parliament a report on balance sheet of a year of implementation of the European Union - Republic of Moldova Action Plan (EURMAP). According to Deputy Premier Andrei Stratan, cooperation with civil society has a special contribution to implementation of the plan. The minister has remarked that while specialised NGOs had a considerable contribution to monitoring and promotion of European policies, training of functionaries, collaboration with governmental authorities.

Deputies representing the parliamentary majority have asked information about undertaken measures and prospects of implementing the social objectives of EURMAP, creation of the juvenile justice system and child's rights, implementation of the Moldovan Village Programme. Also, they demanded preliminary expertises, adjustment of draft legislative acts to European legislation before their presentation to the Parliament. A representative of the Communist Party (PCRM) faction has accused the parliamentary faction of the Our Moldova Alliance (AMN) of passivity in implementing EURMAP and thanked the Christian Democratic People's Party (PPCD) and the Democratic Party of Moldova (PDM) for contributing to the implementation of some reforms included in the Action Plan. Opposition lawmakers have signalled improper attitudes of the Government towards implementation of EURMAP, insufficient information of population, lack of essential progresses in certain key fields (development and quality of economic growth, anti-corruption struggle, lack of concrete provisions and a detailed programme on implementation of provisions of the Plan). The exposed objectives also envisaged the quality of Moldovan diplomats, faulty use of allocated financials resources, delayed annulment of Moldovan visas for E.U. citizens, a situation capable to influence the attitude of the E.U. authorities towards visa system applied on Moldovan citizens. AMN faction leader Serafim Urechean and Social Liberal Party (PSL) chairman Oleg Serebrian have delivered critical statements regarding the assessment of implementation of the E.U.-Moldova Action Plan.

The deputy minister of economy and trade has informed about the rise of compensations in connection with high tariffs for energy resources. In 2005, 263,000 citizens benefited of compensations (219 million lei was spent from the budget). Starting 2007, the compensations will be directed depending on revenue (pilot projects are being implemented in several districts and a sector in the Chisinau municipality).

The deputy director of the agency for regional development has reported the situation of the water pipe Soroca-Balti, which does not function because of technical faults. The provided water unfits the quality parameters and the water pumping stations must be modernised and large sums are needed for complete repairs, but they have not been foreseen to the budget. The functioning of water pipe would generate losses, while consumers cannot afford higher tariffs.

Questions. Interpellations

• AMN Deputy Vitalia Pavlicenco has invoked studies carried out by civil society representatives regarding the financing of justice, which indicate the dependence of courts, interference of the executive and legislature in the process of establishing of financing. Pavlicenco demanded explanations from Government, Justice Ministry and Superior Council of Magistracy, asked the authorities to stop the involvement of functionaries in establishing the financing for justice, accusing them of violating the legislation and limiting the independence of the judiciary.

• PDM Deputy Vladimir Filat has asked the Ministry of Transportation to report to the Parliament on condition of the traffic fund of Moldova, use of means from the traffic fund and implementation of plans on renovation, reconstruction of roads.

• PPCD Deputy Stefan Secareanu has asked the Ministry of Education to explain the change of the name of the lycee "Ghorghe Asachi" from Romanian-French into Moldovan-French, generating a conflict and provoking the society. Secareanu also demanded information about intention to modify the acts on graduation from pre-university institutions, in order to replace turn the "Romanian language" subject into "Moldovan language".

• PSL Deputy Igor Clipii has demanded explanations from the Education Ministry about changes in curriculum, reduction of the number of lessons for certain subjects, transfer of some subjects (including civic education) from compulsory to optional.

• PDSM lawmaker Dumitru Braghis has asked the Government to present an ample information about implementation of the Moldovan Village programme launched during the 2005 electoral campaign with much pomp but, Braghis noted, implemented later with big arrears and deficiencies.

Declarations

AMN Deputy Vitalia Pavlicenco has sought the priority examination of opposition's initiatives, especially of those whose terms for notification and preliminary examination stipulated by the Parliament's Regulation have expired. She particularly indicated draft laws annulling Moldovan visas for E.U. citizens and seeking the denunciation of the agreement on constitution of CIS by Moldova. The parliamentary majority turned down the proposal to examine the denunciation of the CIS Agreement because it "was not examined," a fact that Pavlicenco described as an obstruction of the active opposition.

Government

2.1. Reshuffles

The Government has proposed Iacob Timciuc to the post of Moldovan ambassador to China. Timciuc was minister of energy until March 2005, but he was not reinvested from undeclared reasons.

The executive has decided to recall certain ambassadors of Moldova without making public the reasons:

• Alexei Tulbure is recalled from the post of Resident Representative to the Council of Europe;
• Mihail Manole is recalled from the post of Ambassador to the U.S., Resident Representative of Moldova to the World Bank and IMF;
• Vsevolod Grigore is recalled from the post of Ambassador and Resident Representative of Moldova to the United Nations;
• Andrei Neguta is recalled from the post of Ambassador to France.

Valentin Dragan was relieved from the post of deputy minister of transportation and road management, with the official motivation "at demand", at the May 3 cabinet sitting.

2.2. Decisions

• Decision for the approval of draft law on state enterprises. The document proposes to establish a new mechanism of administration of economic agents founded and owned by state.

• Decision approving the draft law on withdrawal of some fields of the limited society Mold Intera Energy from agricultural circuit. The Government proposes to allow the withdrawal from agricultural circuit of higher quality fields covering 41 hectares owned by the foreign capital Mold Itera Energy for construction of a 450-MW power station near the village of Burlaceni (the district of Cahul). We note that the right to buy agricultural fields is awarded to Moldovan individuals and legal entities, in line with recent provisions to the law. The fact that a foreign company was allowed to acquire agricultural fields and the Government's proposal to attract fields from agricultural circuit without establishing express the compensations required by law in this regard may raise the objections of lawmakers, especially because the change of destination of the agricultural field is expensive enough (about 600,000 lei a hectare).

• Decision on measures needed to create the Ministry of Local Public Administration. The new ministry will take over a part of functions from the agency for regional development, the latter turning into agency for construction and territorial development. The structure and the regulation of the new ministry were elaborated within one month. The Government did not establish if the persons in charge with elaboration of documents on the new ministry will be part of its competence and did not present a candidacy for the post of minister of local public administration.

• Decision on rise of salaries of public functionaries who ensure the technical service of public authorities. The document is aimed to enforce the law on salary in budgetary sector; it stipulates a rise of basic salaries by about 30 percent and will be take effect on December 1, 2005 with retroactive effect.

• Decision on rise of number of personnel of the Customs Service. The Government has decided to increase the number of customs officers by 58 persons, as a new subdivision was created to issue origin certificates for exported goods. The Chamber of Commerce and Industry (CCI) of Moldova was in charge with this activity until now, but the document stipulated by executive does not say if the experienced CCI employees will work in he new customs subdivision.

2.3. Sittings. Decisions. Declarations

Resumption of relations with IMF and restructuring of debts within Paris Club

A new cooperation agreement with the International Monetary Fund was approved on May 5, after almost four years, and it stipulates the release of 118 million dollars for a 3-year term. The agreement calls among others for finalisation of the central public administration reform; better public finance management; reduction of inflation rate down to 10 percent; maintenance of macroeconomic stability; closure of the board of state creditors by the end of 2008.

The Paris Club creditors accepted a restructuring of Moldova's external debt on May 12. Moldova will have to repay only 60 million dollars out of 149 million dollars the next three years due to the agreement during the implementation of the cooperation agreement with IMF, and the debts were restructured for a longer period.

New tackling in privatisation sector

According to the Government, the state needs a new conceptual tackling of privatisation and administration of public patrimony. The methods of privatisation have been reviewed for this desideratum, with the Government approving amendments and completions to some normative acts regulating the field. The Government will approve in early autumn a draft law on privatisation and administration of public property based on two principles: through a contest and through the Stock Exchange of Moldova. Public share packages in 32 joint stock societies will be exposed at the Stock Exchange of Moldova between May 22 and June 9, 2006 and the executive hopes to raise at least 100 million lei from them. According to data of the Privatisation Agency, the public patrimony of Moldova was worth 43.6 billion lei on July 1.

Stance of Government over higher prices of fuels

All filling stations increased the gasoline price (by 6.5%) and the Diesel oil price (by 5%) on May 3 due to higher prices of fuels on world oil market. It should be noted that the prime minister told the General Assembly of the republican union of associations of agricultural producers Uniagroprotect on March 14, 2006, that the price of Diesel oil acquired by agricultural producers will not grow until July 2006, as a moratorium was agreed at a sitting with biggest importers of oil products on market. The executive said that fuels will be imported for lower prices after the Giurgiulesti oil terminal will open (in April-May).

Farmers will fail to work all fields because of bad climatic conditions, lack of circulating means and recent rise of prices of fuels (more than 25 percent of fields are not seeded). Farmers see the solution in subsidising by Government of works requiring many fuels and granting of subsidies for sale of agricultural production. "An example would be that the state pay one leu for every kilogram of grapes supplied to wine plants," federation chairman Vasile Mirzenco said. The Government recommends farmers to acquire Diesel oil from the state-owned enterprise Moldresurse, which sell it for lower prices but has a limited stock.

First estimates of new social performance mechanism

The pilot project implemented on basis of a new concept on optimisation of the social assistance system aims to choose the best method of granting of social aid to people in need. Some methods for selection of beneficiaries of normative compensations are being tested, based on evaluation of the overall revenue of family, and about 32,000 persons benefit of the pilot project. The prime minister wants that the system of nominative compensations covers all socially vulnerable people and a greater attention will be paid to a right calculation of real earnings of the family who seek more social assistance from state, in order to prevent the payment of compensations to people who are not needy.

Dissatisfaction with state of roads

Vasile Tarlev has raised dissatisfaction with the state of roads in Moldova, ordering competent bodies to speed up their renovation by respecting the quality norms. The Ministry of Transportation and Road Management was told to table action plans on implementation of priority projects: reconstruction of the Chisinau-Leuseni route for which the Government has already allocated 50 million lei; renovation of some national roads. According to information unveiled by minister of transportation and road management, about 40 million lei or some 21 percent of the annual volume was already spent for renovation and construction of roads in the first four months of this year.

New dissatisfaction with state of internal trade

A sitting convoked by prime minister has studied the situation of trade, necessary measures for development of this sector. After the president has earlier convoked a similar sitting, Prime Minister Vasile Tarlev raised dissatisfaction with situation on internal market, with the fact that the value of imported goods is often lowered at customs stations, damaging the state budget this way (the annual volume of internal trade exceeds 30 billion lei). A working group created by Government will elaborate an action plan on trade development within two weeks and a concept on trade development in perspective by July 1. The Customs Service will elaborate and implement an electronic system to control external deals in order to establish the right value of imported goods.

The Moldovan prime minister has discussed problems related to development of internal trade network with a representative of the German company Plus Discount (part of the international group Tengelmann), which intends to open a network of 30 markets in Moldova.

SEECP summit

Vasile Tarlev has attended the summit of heads of state and government of the South East European Cooperation Process (SEECP) in Thessalonika, Greece, which focussed on regional cooperation as way to European integration, cooperation to develop regional infrastructure, etc. The prime minister of Moldova has delivered a speech on Moldova's activities in SEECP.

The minister of foreign affairs and European integration has released a declaration saying that the celebration of the Day of Europe coincides with Moldova's entry in the South East European Cooperation Process (SEECP), reaffirming on this occasion the commitment to comply with all requirements needed to join the united Europe. The minister noted that a contest will take place soon to select civil society representatives for participation in creation and functioning of Centres of European Information in Moldova.

3. Presidency

3.1. Decrees

Vladimir Voronin has awarded the Honour Order to Mrs. Heather M. Hodges, U.S. ambassador to Moldova. The order was awarded as a sign of deep gratitude for special contribution to development and deepening of relations between the U.S. and Moldova.

3.2. Sittings. Decisions. Declarations

Visit to Vilnius

Moldova's president has attended the Summit of Heads of State from the Baltic and Black Sea Regions in Vilnius and addressed it. In Vilnius, Voronin had meetings with the secretary-general of the E.U. Council, Javier Solana, high representative of the E.U. for foreign policy and common security; Vice President of the U.S. Richard B. Cheney; Estonian President Arnold Ruutel; Belgian Foreign Minister Carel de Gucht, OSCE chairman-in-office; Ukrainian President Viktor Yushchenko.

Concerns with wine problem

Moldova's president has attended a sitting on May 8 that the Government organised with managers of wine producers and exporters, professional association, bodies of central public administration. The talks focussed on situation of the sector after the Russian Federation has restricted the importation of Moldovan alcohol drinks, and internal and external measures taken by authorities to remedy this state of things. Participants proposed to extend and to diversify the markets for Moldovan wines and cognacs.

On May 12, Vladimir Voronin chaired a new sitting which established measures for consolidation and development of vine growing and wine making sector of the country. According to the presidential press service, the chief of state has highlighted the importance of preventing the degradation of this segment of national economy because of restricted exports to the Russian Federation. In particular, the president indicated the need to respect the programme on enlargement of vineyards, to grow quality sorts, to ensure a strict control on domestic spirits market, in a move to protect producers of wines and quality cognacs.

Working visit to Chisinau City Hall

President Voronin accompanied by Prime minister and other decision makers of the executive visited the Chisinau City Hall on May 13. According to press reports, Voronin said that the top leadership of the country will hold sittings at the Chisinau City Hall once a trimester in order to coordinate the activity of the local and central public administrations. The 2006 city development programme of the capital was unveiled at the sitting, while the main objectives for 2006 are: renovation of streets; reconstruction of the memorial complex Eternitate and northern bus station; arrangement of dwelling districts and entertainment areas; lighting of streets. Voronin has proposed to study possibilities to light the headquarters in the central avenue of Chisinau "from sources of economic agents and public institutions located there, installing day and holiday light systems." The president noted that another 70 million lei will be allocated from the budget for renovation of streets in the Chisinau downtown, but with the condition that the works will be conducted in the warm period of year, by October 1. The sitting discussed a new structure of the Chisinau City Hall and subdivisions of the Municipal Council.

Local councillors, except for some representatives of the communist faction, were not invited at the meeting with the chief of state, so that certain members of opposition factions in the Municipal Council described the meeting as private or "meeting with the municipal executive." It is worth to indicate in the context the provisions of the Law # 123 from March 18, 2003, on local public administration, which says that the "Municipal Council as deliberative authority and mayor-general of the Chisinau municipality as executive authority realise the public administration of the Chisinau municipality." The law does not stipulate a distinct structure such as the City Hall for the Chisinau municipality.

Economic Policies

1. Prices and inflation

Inflation exceeds governmental forecasts...

In comparison with March 2006, the Consumer Price Index (CPI) grew by 1% in April. The cumulated inflation rate for the first four months of this year was 5.9%, while the Government forecasts 10%. As a rule, a deflation is registered on summer, especially for food products, but the impact of unfavourable weather on crops makes us reserved as regards the maintenance of the inflation rate assumed by authorities.

Prices of food products have grown the most. Tariffs of services provided to population have grown insignificantly, in particular, the price of bottled liquid gas rose by 0.5%. Statistics show that CPI for food products have risen by 1.7%, manufactured goods by 0.7%, while tariffs for services provided to population increased by 0.4%.

Filling stations have increased the gasoline and Diesel fuel prices by 5.5% in the period concerned. However, the insignificant rise will influence the inflation rate. The higher prices of fuels were especially dictated by external rises. The cost of a ton of gasoline has grown up to 700-710 dollars, while of Diesel oil up to 650 dollars at international exchanges. At the same time, the oil price is permanently growing and reaches a record level of 75 dollars per barrel. Experts say that the rise of fuel prices will affect the agricultural works, as farmers will fail to work all the fields because they are short of circulating means.

2. Financial-banking sector

Credits granted by commercial banks rose by about 52% in the 1st quarter of 2006...

Credits released by commercial banks of Moldova in January-March 2006 totalled 3.68 billion lei (225 million euros) and rose by about 50 percent compared with the 1st quarter of 2005. Long-term credits have grown 4-fold compared with the similar period of last year, up to 141 million lei. At the same time, medium-term credits exceeded 1.7 billion lei or by about 77% more than in the 1st trimester of 2005. Finally, short-term credits amounted to 1.8 billion lei or by 29% more than in January-March 2005.

Foreign investments in banking capital are on the decline...

In addition, most of financial indicators in Moldova's banking system have registered a positive evolution in the 1st quarter of 2006. According to data of the National Bank of Moldova (BNM), the 1st-degree capital of commercial banks has grown by 6% in the first three months, (compared with 4.3% in the similar period of last year), up to 3.05 billion lei (181.6 million euros). The share of foreign investments in banking capital declined by 0.3 percentage points in the 1st quarter down to 50.3%. At the same time, foreign investments have grown by 3 million lei, up to 590.5 million lei, while local investments have increased by 10.4 million lei, up to 584.2 million lei.

Assets of banking system estimated at about 1.12 billion euros...

The total assets of the Moldovan banking system grew by 4.1% in the 1st trimester of this year, up to 18.74 billion lei (1.12 billion euros). Cash in circulation has grown by 7%, up to 1.009 billion lei. The net revenue in Moldova's banking system exceeded 168 million lei in the 1st trimester of 2006 and rose by 53.7% compared with the similar period of the precedent year. Profitableness of assets and shareholder capital grew by 0.5 and 4.2 percentage points compared with late 2005, up to 3.7% and, respectively, 21.5 percent. The most important rise was registered for deposits of individuals - by 10.4%, up to 7.61 billion lei.

International currency reserves are on the rise...

The currency reserves of BNM have reached a new level - about 616.6 million dollars after they rose by almost 9 million dollars in the first week of May. At the same time, the currency reserves have reached a historical maximum and exceed 630 million dollars after the first part in the amount of 16.9 million dollars of the International Monetary Fund's 118.2 million dollars credit that the IMF Executive Board approved on May 5 entered the BNM account on May 15. The program with IMF stipulates currency reserves worth 750 million dollars for this year. They amounted to 597.43 million dollars in late 2005.

Moldova rebuilds its relations with foreign creditors...

The IMF's Executive Board has approved a new agreement worth 118.2 million dollars with Moldova for a 3-year term. It was approved under the Poverty Reduction and Growth Facility (PRGF). The approval of this agreement allows Moldova to obtain about 16.9 million dollars in the next period. The IMF financing will be used to consolidate currency reserves, a consolidation which will influence the economic growth and stability directly. The credit is offered for a 10-year period. The period of grace is 5.5 years, while the interest rate is 0.5%.

At the same time, the Paris Club creditors agreed on 12 May 2006 with the Government of Moldova to a restructuring of its external debt. This agreement follows the International Monetary Fund's approval of Moldova's arrangement under the Poverty Reduction and Growth Facility on 5 May 2006 in support of the Government's ambitious reform programme. This agreement consolidates roughly 150 million dollars due on debts contracted by Moldova before 31 December 2000. The rescheduling of the maturities and 30% of the arrears is structured on the so-called "Houston Terms": ODA debts are to be repaid over 20 years, with 10 years of grace, at interest rates at least as favourable as the concessional rates applying to those loans; commercial credits are to be repaid over 15 years, with 5 years of grace with progressive repayment, at the Appropriate Market Rate.

3. Labour market

Teachers suffer losses despite rise of medium salary...

According to data of BNS, the medium salary on economy accounted for 1,533.6 le in March 2006, by 116.5 lei more than in the precedent month. A monthly report of BNS shows that the medium pay in budgetary sector was 1,275.8 lei (98.1 dollars) in March, by 78 lei more than in February, while the medium salary in real sector was 1,674.2 lei (approximately 100 euros) and rose by 130.7 lei.

The highest salary was paid to employees of financial institutions - 3,864 lei, by 1,043 lei more than in February. The medium salary in industry sector has grown by 212 lei, up to 1,979 lei, while the average pay in constructions rose by 228 lei, up to 2,000 lei. At the same time, the medium remuneration of teachers dropped by 59 lei in March, down to 1,171 lei, while doctors and social assistants earned 1,202 lei on average.

4. Public finances

Basic revenues to state budget grew by 15.3% in January-April...

Basic revenues in the amount of 2.54 billion lei (154 million euros) went to the state budget in January-April 2006 or by 15.3% more than in the same period of last year. At the same time, grants in the amount of about 60 million lei were attracted from foreign donors. Also, foreign payments of 16 million dollars were performed to honour the commitments on foreign credits contracted by Moldova and accordingly to the schedule, of which 7.7 million dollars in main payment and 8.3 million dollars in interest on foreign loans.

5. Foreign trade

Trade deficit is on the continued rise...

The deficit of Moldova's trade balance accounted for about 295 million dollars in the 1st trimester of this year, which is 1.5-fold more than in the similar period of 2005. The import/export coverage rate was 46.8% in January-March 2006, compared with 56.2% in the similar period of 2005. Moldova's exports were valued at 259.4 million dollars, while imports at 554.3 million dollars. Imports grew by 25.7% while exports rose by 4.6%. Moldova's highest deficit is registered in relations with CIS member countries, notably 134 million dollars, followed by the European Union - 83 million dollars and Central and Eastern Europe - 33 million dollars.

The exports to the Russian Federation, the main trade partner of Moldova, declined in continuation in the 1st quarter of 2006. Deliveries to the Russian market have dropped by 5.8%, down to 82.1 million dollars. Also, exports to Romania have decreased by 1.2%, down to 31 million dollars, and to Italy by about 20%, down to 27.8 million dollars. At the same time, imports from the first three trade partners of Moldova have rapidly grown. Imports from Russia have increased 2.2-fold, up to 118.4 million dollars, Ukraine by 2%, up to 102.1 million dollars, and Romania - 1.9-fold, up to 62.2 million dollars. Governmental forecasts for 2006 saying that the trade deficit will account for 1.33 billion dollars will be exceeded for sure.

Transdnistrian Conflict

A new Transnistrian settlement plan?

The mediators and observers in the Transnistrian settlement process are preparing a new draft plan regarding the division of powers between Chisinau and Tiraspol, the Head of the OSCE Mission to Moldova, William Hill, told the press on 15 May. According to Hill, the new draft is in full compliance with the Moldovan laws and grants significant powers to Transnistria, including to collect taxes, giving the centre powers in such fields as defence, security, customs and currency.

According to the OSCE official, next week Brussels will host consultations of the mediators and observers, and between 31 May - 1 June, the OSCE Chairman in Office, Belgian Foreign Minister, Karel de Gucht, will visit Chisinau, including to seek ways to boost the negotiations process.

Securisation of the Transnistrian segment of the Moldovan-Ukrainian border

On 12 May in Odessa took place the second meeting of the Consultative Council of the EU Border Assistance Mission, attended by Moldovan and Ukrainian deputy foreign ministers, the Head of the EC Delegation to Ukraine, Iain Boag, and the Head of EU BAM, General Ferenz Banfi.

According to General Ferenz Banfi, since the start of the activity of the mission, many cases of large quantities of smuggling of poultry, cigarettes and alcoholic beverages were prevented. About 90% of smuggled poultry is then exported to Ukraine and other states. The European official called this business "organised criminal activity with the ulterior investment of means in the legal import in Transnistria". It would be based on the difference between the customs duties perceived by the Ukrainian and Transnistrian authorities. "The Transnistrian authorities either do not want, or are not able to take the necessary measures to counteract such activities," General Banfi said.

Ukraine's Deputy Foreign Ministry, Andrei Vasilovski, showed happy with the results of the EU BAM, but said European border specialists need to monitor the border for at least two years to be able to dismantle the contraband schemes that have been built for years.

The EU Mission representatives have passed on to the Moldovan and Ukrainian authorities 42 recommendations with a view to creating a modern, integrated border management system. The recommendations foresee, among other things, a more intense exchange of information between Moldovan and Ukrainian customs officials, and setting up a modern system of risk control.

At the same time, the participants in the 12 May meeting concluded that the new customs regime introduced in March 2006 has helped increase the efficiency of the border management system and the transparency of operations of export and import from and to Transnistria.

The EU warns of a possible worsening of situations in Transnistria

In an interview with the web portal EUobserver, EU Special Representative for Moldova, Adriaan Jacobovits de Szeged, warned that the situation in Transnistria could get worse in the next weeks. "I think that Smirnov feels himself threatened by the recent developments, especially the active involvement of the EU and US in the Transnistrian issue.....If you feel your position is in danger, a crisis is often construed useful by leaders," stated Jacobovits with reference to the incident in the Varnita port.

We would like to remind that on 21 April the Transnistrian militia took by force the control over the river port Varnita, which is under the jurisdiction of Chisinau, on the pretext that in Varnita there is only one port - the branch of the River Port Bender, which is under Transnistrian jurisdiction. On 12 May the court of justice of Anenii Noi district confirmed the property rights of the Mayoralty of the village Varnita over the river port Varnita and instructed Varnita officials to demand the Transnistrians to leave the port.

Within the same interview, Ambassador Jacobovits called for "maximum international support" for the new customs regime at the Moldovan-Ukrainian border. "The new customs regime is a small step towards an eventual reunification of Moldova," and the Ukrainian President Victor Yushcenko is " one hundred percent" behind it, said Jacobovits.

Ambassador Jacobovits described Transnistria as "an authoritarian, if not a police state" with camouflaged tanks on the border, no free press and statues of Lenin in the streets. "It strikes you, that you are back in the Soviet Union. Really, the place is very isolated."

Foreign Affairs

Republic of Moldova - Council of Europe

The Committee of Ministers of the Council of Europe has adopted the 4th interim resolution on execution of the European Court of Human Rights' judgment on "Ilascu and others versus Moldova and the Russian Federation". Under the 2004 ECHR judgment, the defendant states must take all the measures needed to stop the arbitrary detention of imprisoned plaintiffs and to release them immediately. The CoE's Committee of Ministers encourages the Moldovan authorities in its 4th resolution to continue their efforts and declares firm decision to ensure respect for the Russian Federation's obligations in the virtue of this judgment. The Committee of Ministers calls on authorities of member states to take appropriate measures.

On 9 May 2006, the ECHR communicated a judgment of the chamber on a repetitive case: "Lungu vs. Moldova" (non-execution of judgment to pay indemnity). The court indicated findings similar to cases raising the same problems: violation of Article 6 (1) (fairness); violation of Article 1 of Protocol 1, allocating 98 euros to applicant in pecuniary damage, 1,000 euros in non-pecuniary damage and 300 euros in costs and expenses.

Republic of Moldova - European Union

Moldova will start negotiating with the European Commission a facilitated visa regime with the E.U. members in early summer, while the Moldovan Government intends to annul the Moldovan visas for E.U. citizens on January 1, 2007.

The Moldovan speaker said after a meeting with a group of experts representing the Great National Assembly of Hungary that Moldova could become the first state in the European Neighbourhood Policy to implement the TWINNING Project, a bilateral European assistance tool aimed to consolidate the institutional capacities of beneficiary country. The cooperation agreement is being drafted and it may be finished within a couple of months.

E.U. Council Secretary Javier Solana, E.U. high representative for foreign policy and common security, has told an international conference in Vilnius that the E.U. will continue supporting solutions to "frozen" conflicts in Europe. The E.U. will cooperate in this regard with the U.S, and the Russian Federation, which has a big influence in the region, but national governments play the priority role.

The executive has empowered the minister of economy and trade to sign on behalf of Moldova a framework agreement on external assistance with the Commission of European Communities, which will substitute the existing TACIS Programme. Starting 1994, when the cooperation agreement was signed, the European Commission has provided technical assistance worth 140 million dollars via TACIS. A public auditing of the implementation and efficiency of TACIS projects was not conducted in Moldova, but it was earlier announced that the funds allocated within this programme to other former Soviet states (especially the Russian Federation) have been used inefficiently. The fact that Moldova's legislation was not rallied to international standards until now and the process of preliminary expertise of national regulations is not in the necessary order raises many doubts over efficiency of implementation of the TACIS Programme in Moldova and competence of institutional capacities of structures in charge with its implementation. Therefore, the new assistance agreement will be implemented through new mechanisms, with a maximum efficiency and uprightness.

The Romanian foreign minister has told a news conference within the SEECP Summit in Thessalonik that Moldova, new full rights member of the cooperation process, shall really assume the effort of European integration. Mihai Razvan Ungureanu outlined that the inclusion of Moldova besides the Western Balkan countries by E.U. and separation from the group Ukraine and Belarus is justified by fact that Moldova's dimension is small, while costs and speed of implementation of reforms needed for joining are theoretically low. Ungureanu noted that the start of internal reforms for adoption of the acquis communautaire and loyal assuming of lines of foreign policy of the E.U. are the main arguments expected by Brussels from Chisinau.

Republic of Moldova - Romania

The Moldovan minister of foreign affairs and European integration told parliamentary hearings on 11 May, 2006 that the understanding between Moldova and Romania is "total", while cooperation is "active". The draft border treaty is being discussed, while the draft visa agreement is being completed. As regards the draft basic treaty, Andrei Stratan said that a draft "treaty of partnership and cooperation between the Republic of Moldova and Romania" was elaborated and it will be examined accordingly to appropriate diplomatic procedures.

Romanian President Traian Basescu has told a meeting with Austrian President Heinz Fischer that Romania wants the inclusion of the Republic of Moldova in the same E.U. joining package with the Western Balkans. The Romanian president considers that Moldova should be provided a different route than Ukraine as regards the European integration prospect.

Romania offers 3,500 seats in educational institutions to Moldova in the academic year 2006-2007 and they are entirely or partly financed by the Bucharest Ministry of Education and Researches. The access to education is provided despite the Chisinau authorities refuse to sign student exchange protocol with Romania.

Moldova has sent humanitarian aid comprising tents, counterpanes, syringes, vaccines, powder milk, and mini-power stations to victims of natural disasters from Romania. The cost of the aid is estimated at over 300,000 lei (18,000 euros).

Republic of Moldova - Russian Federation

The Russian Federation wants to favour the "relief of situation" in the Transnistrian region of Moldova by influencing the sides in searching a compromise. According to the Russian Foreign Ministry, Minister Sergey Lavrov has delivered such statements at a meeting with Igor Smirnov, leader of the self-proclaimed Moldovan Transnistrian Republic. Lavrov said that the involvement of Russia will create political premises for resumption of the Transnistrian settlement negotiations "with the purpose to elaborate a special, guaranteed status of Transnistria as part of integrated Moldova."

Continuation of negotiations with Gazprom

Officials of the gas giant Gazprom say that they are negotiating possibilities to extend the cooperation in energy sector with Moldovan partners and, therefore, the price of natural gas delivered to Moldova could remain at the level of 110 dollars per 1,000 cubic metres. Concrete projects could be announced only after negotiations, a spokesperson for the Russian company has said.

The Russian Federation has offered 103 scholarships for Moldovan students and candidates to doctor's degree for the academic year 2006-2007. Persons admitted at institutions of higher learning in Russia will not pay for their education.

Officials of the Interior Ministry of Moldova have confirmed that the Russian Federation awarded political asylum to Moldovan crime leader Grigore Caramalac, alias Bulgaru. Law enforcement bodies from the two countries discuss the extradition of Caramalac, who was declared as internationally wanted in 1998 for grave and very grave offences.

Moldova in the world

According to a study by magazine Foreign Policy and the centre of investigations Fund for Peace, Moldova is ranked the 58th place in a standing of states of the world regarding the stability criterion . The study is based on 12 political, economic, social and military criteria. The African states are the most instable (Sudan, Congo, Cote d`Ivoire), while Scandinavian countries (Norway, Sweden, Finland) are the most stable.

Moldova was admitted as full rights member of the South East European Cooperation Process (SEECP), a structure created 10 years ago, which brings together 10 members: Albania, Bulgaria, Greece, Macedonia, Romania, Serbia-Montenegro, Bosnia-Herzegovina, Croatia and Moldova. The European Commission considers SEECP as an efficient regional tool in the European integration process.

Studies, Analyses, Comments

Driving away from CIS
Igor Botan, 15 May 2006

The August 2006 CIS summit in Kazani has declared 2006 as "the year of CIS". The motive is that this structure turns 15 in December 2006. However, the main political events that happened in the past 2-3 years and scheduled for the first half of 2006, with the participation of CIS members, do not predict anything good for this organisation

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Therapy of International Monetary Fund
Iurie Gotisan, 15 May 2006

We will try to make a short incursion in the history of the International Monetary Fund (IMF) from the very beginning and we think that this would be useful to our readers

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