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Activity of Public Institutions

Parliament
Government
Presidency

Macroeconomic trends in 2006... and forecasts by Iurie Gotisan
European integration remains a priority of the Republic of Moldova by Igor Botan

Activity of Public Institutions

Parliament

1.1. Reshuffles

The Parliament has accepted the resignation of Vasile Tataru, judge of the Supreme Court of Justice.

1.2. Legislative acts

• Broadcasting Code. The document adopted in the final reading has included amendments aimed to adjust the code toe European norms and recommendations of experts of the Council of Europe, the OSCE and nongovernmental organisations working in this field. According to developers, most of opinions and proposals were taken into consideration, but representatives of some parliamentary factions did not warm these assertions. The hottest and contradictory talks focussed on procedure of constitution of the electronic media watchdog and the Board of Observers of the broadcasting company TeleRadio-Moldova and regulations on functioning of local public audiovisual institutions. The parliamentary majority had tried to prevent the introduction of a special procedure of selection and appointment of candidates to these administrative structures, but the opposition insisted on the need to approve the candidates through a qualified majority (3/5) of votes of parliamentarians.

• Law on completion of Article 16 of the Civil Code. It introduces detailed norms saying that the share of non-pecuniary damages must be necessary and reasonable and must be established on basis of: - nature of reports; - social impact on person; - gravity and extend of psychical or physical sufferings of affected person; - proportionality between granting damages and size of defamation; - guilt of the person who committed the damage; - measure in what this compensation may satisfy the affected person, etc. Opposition lawmakers insisted that a limited size of damages be established because the lack of such provisions leads to sanctioning of mass media that publishes critical articles and to their bankruptcy. This document aims to contribute to implementation of recommendations of the Council of Europe on sanctioning for defamation.

• Laws on ratification of international acts on abolition of death penalty. The Parliament has ratified Protocol 13 to the European Convention on Human Rights and Fundamental Freedoms, abolition of death penalty in all circumstances, and the second facultative protocol to the international pact on civil and political rights on abolition of death penalty.

• Law on basic principles and mechanism regulating the entrepreneurial activity. The essence of the document consists in reducing the excessive regulation of entrepreneurial activity and establishing new principles on appearance and adoption of regulations in the field. According to the included concept, reduced normative regulations will be included in laws and acts adopted by Government, while legislative acts in effect that allowed public authorities to regulate different fields of activity of the entrepreneurship will be reviewed. The document continues the regulatory reform initiative through the "guillotine law" and it is part of the European Union - Moldova Action Plan.

• Law on organisation and functioning of the national commission for collective consultations and negotiations, of commissions for collective consultations at sectoral and territorial levels. The document establishes the legal status, mode of organisation and functioning of tripartite bodies of social partnership. These commissions are created to resolve labour and socio-economic problems and to develop the social partnership at national, sectoral and territorial levels. Representatives of the opposition have demanded the revision of the mode of management of national commission and giving of a legal nature to its decisions, but the parliamentary majority has turned down these proposals and kept the norms allowing a representative of the Government to lead the secretariat of the commission and the commission in general.

• Law on modification and completion of the Election Code. The law derives from the activity plan of the Parliament for fulfilment of recommendations toward the CoE and eliminates a series of shortcomings indicated by the OSCE/CoE in the Election Code of Moldova. The Central Election Commission has worked out the initial draft jointly with the Association for Participatory Democracy ADEPT. It should be noted that the final document does not cover a series of main problems indicated in the OSCE/CoE expertises: - revision of the electoral system; revision of the electoral threshold for independent candidates; - ensured representation of national minorities; - ensured participation of citizens working abroad in elections (for more details about the drafts tabled by ADEPT visit www.e-democracy.md).

• Law on modification of some legislative acts on justice. This law also derivates from the activity plan of the Parliament for fulfilment of recommendations of the CoE concerning independence and consolidation of capacities of the judiciary. The Parliament has modified many laws regulating the status of judge, the judicial organisation, the activity of the Superior Council of Magistracy (SCM), the Supreme Court of Justice (SCJ), qualification and discipline colleges, etc. Under the same law, new elections for the post of SCM chairperson will be organised within three months because the new law bans the SCM chairperson, the Prosecutor-General and the Justice Minister to run the SCM.

• Law on modification and completion of the Code of Civil Procedure. The document adjusts the provisions of CCP to recommendations of international experts, in line with the activity plan on fulfilment of the CoE recommendations.

• Law instituting district local public authorities in the Chisinau municipality. The law on local public administration, the law on administrative-territorial organisation and the Election Code have been modified with the purpose to create district councils and mayoralties in the Chisinau municipality. These authorities will be created after the 2007 general local elections and they will take over the functions of district praetor's offices and will hold competences of the Chisinau City Hall and Municipal Council. The law establishes that sectors are administrative-territorial subdivisions of the Chisinau municipality. The document was drafted and adopted in a hurry, without appropriate public consultation, while some imperfect norms and the lack of experience needed for district management of the capital may create many problems when the law will be implemented.

• Law modifying the Code of Penal Procedure. The code is adjusted to recommendations of CoE experts and it includes many changes resulted from implementation of the trial-penal legislation in the past three years. Provisions on preventive arrest and holding of person in custody during examination of penal case were revised.

• Law on completion of Article 4 of the law on healthcare. The law launched in late 2004 bans private medical institutions to work inside public health institutions. Opposition factions have described this draft as discriminating and capable to make private medical institutions which lack the funds needed to build own headquarters go bankrupt, when the document was discussed in the first reading. They invoked that many private institutions have signed rent contracts, have considerably improved the headquarters of medical institutions, while the Health Ministry had earlier conditioned the issuing of licences for activity in healthcare sector with renting of offices inside public medical institutions. It is presumed that the severe stance of the parliamentary majority was related to the fact that the Moldovan president has raised dissatisfaction with debates on this issue held in the Parliament, at a recent sitting on combat of corruption, and asked the speaker to limit this kind of talks "by adopting an organic law."

• Law on organisation and functioning of markets of agricultural and food products. The final document included the provisions of the draft law on inter-professional organisations of agri-food products, establishing a legal framework on creation and organisation of markets of agricultural and food products by individuals and businesses that produce, store, process and/or sell these products on domestic and/or foreign markets, as well as regulations on creation and functioning of inter-professional organisations for a product of a group of agri-food products.

• Law on modification of the 2006 state budget law. The document adopted by parliamentary majority in two readings at once increases the revenues in state budget by 737 million lei and the expenses by 513 million lei. The general deficit of state budget will be 110.5 million lei. The amendments are related to collection of additional returns (income tax, internal fees, VAT for imports, excises), grants and foreign credits. The argued criticism of opposition lawmakers referred to: - allocation of very large amounts for administrative and infrastructure objects administrated by Government and Presidency (the allocation of over 24 million lei for reconstruction works and endowment of headquarters of the Presidency, Government, holiday villa and residence of the chief of state; addition of 20 million lei to the Government's reserve fund, which the executive has already used up, and others). Opposition factions indicated the lack of clear priorities in distributing the resources hardly gathered in the budget, spending of public money for inefficient reconstructions; lack of capacities of real estimation of budgetary incomes and their intentional reduction before approval of the annual budget law, etc.

• Law extending the deadline when private educational institutions must meet requirements of legislation in the field. The Parliament has extended the deadline for registration of private educational institutions in order to allow them to meet the requirements of the education law: - the minimum statutory capital (1 million, 500,000 and 300,000 lei); - own headquarters, material base for teaching process (appropriate classrooms, laboratories, libraries). The parliamentary majority has recently turned down a proposal of opposition lawmakers to liberalise these requirements and to allow private institutions to rend headquarters.

• Law on temporary non-calculation of fines for late payment of VAT for agricultural producers. The document establishes that fiscal bodies will not apply (will not calculate) fines for late payment of VAT for agricultural producers till November 1, 2006 through derogation from provisions of the Tax Code. The executive has motivated its proposal through difficult situation in agriculture sector, which is strongly influenced by impossibility to export agro-food products and wines to the Russian Federation, a situation that deprive farmers of the money needed to pay the VAT. Opposition lawmakers have described this proposal of the Government as a proof of the failed implementation of the decision to introduce VAT in agriculture, a situation that they had earlier signalled, but the governance ignored their arguments.

• Law on measures of social protection of population in connection with higher natural gas tariffs. The document was adopted with the purpose to socially protect the population in connection with the rise of natural gas tariffs. It stipulates the compensation of expenses for the consumption of up to 30 cubic metres of natural gas for an apartment (house) a month to all categories of household consumers till March 31, 2007. The compensations will cover half of the difference between size of the new natural gas tariff and the tariff registered before July 1, 2006 (up to 11 lei a month will be used for a consumer). The expenses for compensation of population will be covered by Moldova-Gaz through transfer from state budget finances.

• Law on modification of legislative acts - bases of tax policies for 2007. More than 70 laws were modified and new regulations on tax policy for the budgetary year 2007 were established. Although some facilities on income taxation were included, their effect is strongly reduced by introduction of a new traffic tax, maintenance of the major share of tax for individuals by annulling the VAT exemptions for building of social residences.

• Law on identification and registration of animals. It establishes basic principles of organisation and conduct of activities on identification and registration of cattle, sheep, goats, swine, except for wild ones. They will be included in a register covering electronic data, exploitations, identified animals from this exploitation and their move, set of veterinary documents issued to owner or holder of exploitation. The document, which is part of the Moldova-E.U. Action Plan, aims to control and to adjust the national legislation to European regulations.

• Law on protection of animals used for experiments or other scientific purposes. It defines the notions used in the field to establish the implementation of the law for the use of animals for experiments: - obtaining, making, testing of quality, efficiency and safety of drugs, food products and other substances or products, in order to prevent the diagnosis or treatment of some diseases, affections or other abnormalities or their effects on human, animals or plants and evaluation, detection, regulation or modification of physiological conditions on human, animals or plants; protection of environment in the interest of health and human and animal welfare. The document fits the community regulations in the field.

• Law modifying Article 82 of the Labour Code. It modifies the recently enforced provisions (Law# 8/2006 enforced on 02.06.2006), which were establishing the possibility to cancel the labour contracts with retirees or people who go retired. The enforcement of these provisions has raised hot debates and a strong negative social reaction (there were cases when military who enjoy preferential retirement conditions have been fired from armed forces), and this fact made the chief of state convoke a special sitting on this issue and declare that the "modifications envisage only directors", but they fit the international and national standards on right to work. As warned by opposition lawmakers, these provisions were not establishing what the chief of state said and the Government was urged to table amendments capable to adjust the organic law adopted by Parliament with these ideas. Under Art.82 (i) of the Labour Code, heads of state units or enterprises with major state capital will stop their activity when they turn 64 years. The dismissed people will be able to get employed for a fixed period. The Communist majority has turned down a draft on this issue, which sought the exclusion of any discrimination and dismissal for mentioned reasons, tabled by a group of opposition lawmakers, and it did not pay the necessary attention and did not prepared the document for examination at a plenary sitting. The adopted law did not include regulations capable to settle cases registered in the two months when the previous norm was implemented, with fired persons remaining this way without possibilities to contest their dismissals.

• Decision on creation of the special commission for control and monitoring of the process of execution of legislation on administration of public fields by Moldovan Government. The commission was created in connection with the need to control the respect for provisions of legislation that regulates the use and protection of state land fund, being motivated by frequent initiatives of the Government to establish the fields with special legal regime, to change some fields, and other situations when many violations related to administration of land fields. The special commission verifies within six months: - how the Government respects the provisions of the Land Code; - how efficiently the territorial offices of the Government monitor the respect of district and municipal councils for provisions of the Labour Code; - how legal are the decisions to change the destination of fields, especially, on withdrawal of fields from agricultural circuit; - how legal are the acts that served as ground to sell public fields.

• Package of laws on local autonomy reform. Starting from recommendations of the CoE and specialised international organisations, the special parliamentary commission created for this purpose has elaborated three draft legislative acts which the Parliament passed in the first reading and will deliver them to the CoE for examination: 1. Draft law on administrative decentralisation. The document proposes to establish a general framework regulating the administrative decentralisation on basis of principles and rules of delimitation of fields of activity between central and local public authorities. It proposes competences delegated by state to local public authorities of 1st and 2nd levels, activities administrated by local public authorities: mandatory, optional or delegated. 2. Draft law on local public administration. It proposes a new law on local public administration capable to modify the present regulations on competence of local public authorities; their internal auditing; transparency of activity of local councils, and others. 3. Draft law on modification of some legislative acts on local finances. The document proposes that the entire sum of real estate tax remain at local public administration authorities of the 1st level and the transfer of all sums raised from income tax of businesses from administrated territory to local authorities of the 1st and 2nd levels. Also, a rise of collections to traffic fund is expected from centre to the territory. The new amendments aim to ensure the gradual implementation of the principle of autonomy in local finances in future, in accordance with constitutional principles and recommendations of the Council of Europe, of other international organisations.

• Draft law on prevention and combat of domestic violence. It establishes the legal and organisational bases for prevention and combat of family violence, determination of authorities in charge with prevention and combat of this phenomenon, regulation of the procedure of signalling and settling cases of restriction. The Communist faction voted the draft, but criticised it, saying that the effective legislation allows measures for prevention and sanctioning of domestic violence, while the implementation of the law will require more expenses from the budget.

• Draft law on status of penal officer. It regulates the status of persons in charge with penal investigation and consolidates the principles ruling this activity (independence, legality, equality and presumption of innocence).

• Draft law on modification and completion of the law on Information and Security Service of Moldova. Although it is a point of the programme on adjustment of legislation to the CoE recommendations, many provisions of the project have raised criticism among opposition lawmakers, who feared that it is capable to contribute to the transformation of SIS into a political police. Provisions allowing SIS to verify the candidates and entities to public posts, to launch official warnings, to summon anybody, to motivate refusals of employment, etc. raise concern.

1.3. Parliamentary control. Declarations

Hearings

Although the seventh month of the year is over, the prime minister has presented a report to the parliament which mainly focussed on social-economic situation in the 1st quarter of 2006. According to the report, the evolution of socio-economic indicators confirms the maintenance of macroeconomic stability, consolidation of financial discipline, honouring of external commitments and, ensuring of economic growth in general. The evolution of development of national economy was linked to the less favourable influence of external factors, mostly of political nature, with clear intentions of blocking, blackmail or economic diversions (actions of limitation of access of agro-food production to Russia and restriction of electricity deliveries, blocking of importation of vine-wine products). The rise of gas prices and barriers on way of exportation of agricultural products, especially of wines, to traditional markets have developed into an external "shock", which contributed to the rise of inflation directly (through growth of production expenses) and indirectly (through intensification of inflationist expectations). Consumer prices have grown by 7.4%, with paces registering a rise of 2.7 percentage points compared with the similar period of 2005. The exchange rate of national currency has depreciated by 3.6% versus U.S. dollar in nominal terms in the first six months of this year. The dependence of economy on external factors was outlined: exports declined by 10.6% in January-May 2006, while imports rose by 14.4%. The production made by industrial enterprises in the first half of this year declined by 6.4% (in comparable prices) compared with six months of 2005. The blocking of exports has halted the wine bottling and exportation process and therefore the volume of wine production has declined by 42.4%, compared with the similar period of 2005. At the same time, the production volume of cement, lime, plaster, textiles, footwear producers, enterprises producing and distributing electricity, etc. has grown.

Questions and interpellations

PDM Deputy Vladimir Filat has asked the Prosecutor-General's Office to control the use of torture and inhuman treatments by law enforcements. He invoked the worsening of situation in the field and a recent death of an ill-treated person.

AMN Deputy Veaceslav Untila has appealed to the Prosecutor-General's Office and SIS to investigate the worsening of situation on financial-banking market, invoking some Transnistrian press reports about existence of a plan aimed to worsen the situation in the field in Moldova.

PCRM Nicolai Gutul has asked the Prosecutor-General's Office to investigate the profanation of monuments of soldiers of the Soviet Army in the district of Glodeni.

Deputy Igor Clipii has requested the Prosecutor-General's Office to investigate the profanation of the cemetery of Romanian soldiers, which has recently opened in the village of Tiganca, saying that the recent cases of vandalism demonstrate the dangerous nature of national policy promoted by governance, which instigate morally unbalanced people to hold harmful activities.

AMN Deputy Valeriu Cosarciuc has asked the Prosecutor-General's Office to investigate the denigration of heads of some institutions of higher education by a group of Komsomolists who accuse the rectors of those institutions of abuses and violation of legislation without providing cogent evidence in this respect.

Speeches

End of summer session

Representatives of opposition factions have said in their final speeches that the measures taken by governance to improve the situation in country are insufficient. Representatives of AMN and PSL have bitterly criticised the governance for situation in economy, social sector, justice, mass media, human rights and democratic freedoms, national policy. The PDM and PPCD factions reproached the Government and the parliamentary majority that they have a negative reaction to drafts of the opposition, do not manifest the same spirit of cooperation in all fields, and limit themselves to chapters pre-established in the process of negotiation for election of the chief of state. At the same time, representatives of the "constructive opposition" expressed satisfaction with promotion of reforms in main fields: justice, mass media, participation in control on security, electoral, inspection bodies, local autonomy, etc. The PPCD faction considers that only one out of ten conditions raised for the election of the chief of state - reformation of Prosecutor's Office and law enforcements - was not fulfilled until now, but it will be achieved by the end of this year.

The final speech of the Parliament chairman was a summary of the main accomplishments obtained in six months of activity, with Marian Lupu saying that more things have been done in that period than in 11 years of members of Moldova to the Council of Europe. The activity of lawmakers focussed on priorities of the E.U.-Moldova Action Plan, the activity plan for implementation of the CoE recommendations, continuation of the regulatory reform and maintenance of the social development policy. The speaker criticised the Government for not doing its best for the implementation of the E.U.-Moldova Action Plan and noted that starting October the Parliament will not examine any longer initiatives without expertises in terms of accordance with provisions of the acquis communautaire, anti-corruption requirements. The speech of the speaker also envisaged the cooperation with civil society, with Lupu appreciating this process and noting that at least 35 contributions have been received within this process from 9 NGOs. In particular, he highly appreciated the professional contributions of the Institute of Public Policies, the Association for Participatory Democracy ADEPT, the Independent Journalism Centre, CREDO, CAPC and IDIS-Viitorul, which have directly participated in writing or expertise of the texts of laws.

Speech of PACE president

The president of the Parliamentary Assembly of the Council of Europe (PACE), Rene Van Der Linden, addressed the Moldovan Parliament on July 27. The European official saluted progresses made in the process of readjustment to the CoE recommendations, but suggested that the implementation of documents leaves much to be desired, while the functioning of some democratic institutions raises concern. He underlined that the Transnistrian problem cannot be an excuse for not fulfilling the voluntarily assumed commitments toward the CoE. The PACE president considers that democratic processes and institutions in Moldova need important reforms in continuation and highlighted, in particular: the functioning of political parties; mass media; justice; human rights and rights of minorities; trafficking in human beings; local autonomy; political freedoms; corruption. He noted that the deprival of the AMN faction leader of the right to be part of the Moldovan delegation to PACE, the persecution of some representatives of opposition from the territorial-administrative unit of Gagauzia, etc. unfit the CoE practices and recommendations. The CoE monitoring on Moldova will continue and it will focus on implementation of approved acts, as this is a more important stage than the simple adoption of legislative documents. Linden recalled that the CoE monitoring process is an important tool of PACE in assisting member states and a country should seek alone the continuation of the monitoring process as long as it fails to fulfil its commitments with brio.

Declarations

The Parliament has adopted a declaration expressing its deep concern with intention of the illegal Tiraspol administration to hold a referendum on independence of the region in September. According to the declaration, the action contravenes to provisions of the Moldovan Constitution and norms of international law. It condemns the fact that the referendum is declared when the negotiation process is blocked, when the complex of measures implemented at the Moldovan-Ukrainian border shows positive results. The document reiterates the status of permanent neutrality of Moldova and confirms the present political course of non-adhesion to any military blocs.

The PPCD faction has read a declaration against forced introduction of the integrated history course in educational institutions, appreciating this decision as abusive, promoted with the hidden purpose to destroy the cooperation between political forces which reached a parliamentary consensus in 2005. Christian Democrats do no warm the elaboration and the secret discussing of textbooks of integrated history, invoking the violation of international and national laws, CoE recommendations in the field. Developers of the declaration highlight the need of restarting the dialogue between governance and representatives of the other current of opinion, which enjoys a considerable support in society.

The AMN faction has released a declaration in which it condemns decisions of the governance to limit abusively the number of seats in institutions of higher learning, a decision whose implementation has limited the university autonomy and deprived many youths of the opportunity to study what they want, while thousands of seats recommended by authorities have not been solicited. The AMN describes the limitation of the number of students who can study at certain specialties by paying taxes as a continuation of the policy of suppression of private sector, with recent decisions on private healthcare and education proving these statements.

Lawmakers representing the Social Liberal Party have released a statement in which they make common cause with the protest and claims raised to the Parliament by the Association of Former Deported Persons and Political Prisoners, in connection with adoption of some amendments to the law on rehabilitation of victims of political repressions. Victims of repressions and opposition lawmakers describe these changes as inefficient and solicit the chief of state not to promulgate this document and to deliver it to the Parliament in order to take into considerations proposals seeking: - the restitution of fields; the setup of a clear mechanism of estimation of property which cannot be returned; - the establishing of budgetary resources for compensations; - the granting of moral compensations.

Government

2.1. Appointments and reshuffles

The Government has accepted the resignation of Deputy Interior Minister Ion Cozma, head of the Carbineer Troops Department, Olga Poalelungi, director-general of the National Bureau for Migration, and her deputy Ion Moraru.

2.2. Decisions

Decision on conditions of pay of civil employees from national defence, state security and public order bodies. The document establishes specific pay conditions generated by enforcement of the new law on salary in budgetary sector.

Decision on some measures of protection of consumers. It bans the importation of unpacked animal production without labels, data on producer and importer; of some frozen meat products. The Customs Service will control the imported meat products in special depots only.

2.3. Sittings. Decisions. Declarations

Prime Minister Vasile Tarlev has reiterated the most important external accomplishments at a meeting of ambassadors and consuls of Moldova, and notably: - the signing of the Moldova-E.U. Action Plan; - the opening of the European Commission Delegation in Chisinau; - the E.U. Border Assistance Mission to Moldova and Ukraine; - the full rights membership to the South-East European Cooperation Process (SEECP); - the chairmanship of GUAM, which has turned into a regional international organisation; - the elaboration and adoption of the Individual Partnership Action Plan with NATO (IPAP); - the start of negotiations on Moldova's entry in the Central European Free Trade Agreement (CEFTA); - the resumption of relations with the International Monetary Fund and the restructuring of debts by the Paris Club. The premier indicated among priorities: - actions capable to speed up the integration of Moldova into the European Union; - facilitation of visa regime for Moldovan citizens; - better combination of possibilities of bilateral diplomacy and of multilateral diplomacy, economic and political aspects of diplomacy; - the reintegration of the country and the settlement of the Transnistrian conflict; - strengthening of Moldova's positions on economic markets: regional, European, international; - optimisation of activity in international and European organisations, especially in the Council of Europe and the United Nations; - use of all opportunities in order to obtain technical, intellectual, financial assistance with the purpose to adjust to legal, economic, financial, structural, social standards of the E.U.; - promotion of a positive image of Moldova abroad.

It was announced at a TV conference held at the governmental headquarters, with the participation of central and local public administration authorities, that all districts have elaborated and approved local gasification and sewerage and water providing programmes. The gasification level of districts is various, with the maximum share in the districts of Criuleni, Taraclia, the administrative-territorial unit of Gagauzia, the municipalities of Chisinau and Balti reaching 100 percent. The lowest gasification level is registered in the districts of Soroca and Ungheni. The gasification process covered 614 localities, as of January 1, 2006, which is about 40 percent of the total number of localities in country. The building of gas pipes to 33 administrative units is being completed. Overall, the gasification of at least 190 localities is expected in 2006. Representatives of local public administration said that a set of complex measures are being implemented in districts and they aim to restore and to develop water providing and sewerage systems. The prime minister asked the local public administration to update local water providing and sewerage systems within two months, in order to give an impulse to this process.

The prime minister told a July 26 sitting of his cabinet that ministers and other functionaries run the risk to be fired, "if they do not contribute to implementation of the Moldova-E.U. Action Plan." Vasile Tarlev considers that many ministries show little interest for entry in the E.U., do not manifest interest for cooperation with diplomatic representations of Moldova to other countries.

The National Agency for Energy Regulation has increased the natural gas tariff by 50.4%. Moldova-Gaz chairman Ghenadi Abashkin did not warm the new tariffs because he has demanded a 55-60 percent rise of the gas price.

On July 19, filling stations in Moldova increased the price of gasoline by nearly 7% and the price of Diesel oil by about 3%, which was the third rise of fuel prices in 2006. The rise was argued through dearer crude oil and derivates at world exchanges. Earlier, the prime minister had assured that the Diesel oil price for farmers will not grow, while the price of fuels will be maintained after opening of the Giurgiulesti oil terminal scheduled initially for April and for June later.

The Ministry of Education and Youth has launched an information campaign to promote secondary professional education, with the purpose to persuade youths to study at vocational schools. Not all the seats allocated by government for these purpose have been occupied, with youths opting for higher education.

3. Presidency

3.1. Decrees

Moldova's president has signed a decree on opening of the Moldovan Embassy in Georgia.

The chief of state has assigned Alexei Tulbure as resident representative of Moldova to the United Nations; Ion Robu was appointed Moldovan Ambassador to Azerbaijan; Andrei Neguta was named resident representative of Moldova to the Council of Europe.

Vladimir Voronin has awarded the Civic Merit medal to Mihai Perebinos, executive director of the Association of Mayors and Local Communities of Moldova.

The chief of state has awarded the Labour Glory Order to Alexandru Ohotnicov, head of the act service of the presidency, a subdivision of the presidential administration.

3.2. Sittings. Decisions. Statements

Visit to Moscow

Vladimir Voronin attended the informal summit of CIS in Moscow on July 21-22. The presidential press service did not release separate information on outcome of this event, but an interview between the Moldovan leader and a Moscow-based radio channel (Echo Moskvi), considered in opposition with the Kremlin, was widely mediated. Vladimir Voronin said in the interview on the Transnistrian conflict that:

• there are all premises for settlement of the Transnistrian problem before expiration of mandate of Russian President Vladimir Putin;
• he is puzzled that some Russian officials support the separatist regime in Tiraspol, though the basic treaty of cooperation, friendship and strategic partnership between Moldova and Russia stipulates express that the sides condemn the separatism, while Russia recognises the territorial integrity of Moldova in the borders certified on January 1, 1991;
• the Russian peacekeepers from the left bank of the Dniester river have fulfilled their mission and now civil observers must replace the Russian military;
• the European monitoring on the Transnistrian section of the Moldovan-Ukrainian border has combated the activity of some Transnistria-based enterprises which were manufacturing weapons round o'clock;
• the cooperation within CIS has perspectives, if the sides settle the misunderstandings and work together;
• the Chisinau authorities did not receive any act from the Russian authorities to confirm the bad quality of wines made in Moldova;
• the Pasat case does not have a political component, it is related to violation of legislation when weapons were sold and "other deeds".

Speech in the Parliament

The speech of the chief of state did not focus on totals of activity of parliamentarians, but on a future action plan aimed to be a new stage of development and plenary affirmation of country's independence. Vladimir Voronin indicated the need of economic development, economic liberalisation, introduction of new industrial and investment policies, maintenance of eastern markers and enlargement of trade on western market, support and promotion of new business development mechanisms, extension of capacities of free economic zones, creation of technological operators, etc.

Concern with protection of child and family

The chief of state has convoked a sitting on creation of a structure specialised in social protection of the child and family. The creation of a specialised structure in charge with elaboration, coordination, monitoring and implementation of policies on child protection is a priority of the reform of the current child protection system. The chief of state considers that the existing institutional system is inefficient because there are many structures in charge with this field, while an appropriate cooperation and coordination is absent between central structures. Voronin called for the creation of the agency for protection of child and family as distinct subdivision subordinated to Government. It was decided that a set of laws needed to create this agency will be drafted by October 1 and it will be proposed to the Parliament for adopted during the autumn-winter session.

Participation in the world congress of Gagauzians

President Voronin has told the opening of the first world congress of Gagauzians that he is proud that the Gagauz nation had found shelter and own statehood on our land. The further modification of Constitution, granting of the right to legislative initiative to the Popular Assembly of the autonomy, other rights awarded to Gagauzia have become a step forward, one more tool for a free development of the region inside unitary Moldova.

Concerns with enlargement of international cooperation at level of parties

The Moldovan leader has met a delegation of the Party of European Socialists headed by former PACE President Peter Schieder. According to press releases, the sides discussed aspects of activity and process of modernisation and consolidation of the Communist Party of Moldova (PCRM), relations between PCRM and other political parties. Although PCRM is part of the Party of European Left, it is also interested in experience of European Socialists, Social Democrats reunited in the Party of European Socialists.

Vladimir Voronin has met with the secretary-general of the Socialist International, Luis Ayala, and discussed the role of leftwing parties in consolidating democratic processes, promoting ideals of peace, non-violence and social equity. Ayala said that the Socialist International wants to become a positive force in the political resolution of the Transnistrian conflict and in bringing Moldova closer to the family of European democracies, noting that the organisation is tending to intensify the dialogue with partners from East-European area, to use the increasing share of socialist parties inside the E.U.

Economic Policies

1. Prices and inflation

Government and National Bank of Moldova likely to fail the inflation target this year…

The Government and the National Bank of Moldova could fail the inflation target of 10% this year. Economists have already contested this forecast, while statistics indicate a 7.4% inflation rate for the first half of this year. In addition, the rise of natural gas tariffs by over 50% on average, followed by higher tariffs of energy and higher prices of fuels will increase the inflation up to two figures. It is actually impossible to reach the 10% inflation target and it is illusory. Those who administrate them will have to update their forecasts.

2. Tax policy

New amendments to tax policy of the state...

The Prliament approved a set of amendments and completions to legislative acts on tax policy. The draft law includes about 70 articles on modification of 71 laws, mostly on Tax Code. The draft stipulates among others that the annual fiscal exemption of individuals will be increased in 2007 from 4,500 lei up to 5,400 lei, while for maintained persons will grow from 840 lei this year up to 1,440 lei in 2007. The approved amendments also stipulate the reduction of income tax for individuals, adjustment of excises for weak alcohol drinks to inflation rate.

3. Real sector

GDP will grow by 6% a year in 2007-2009...

The GDP will grow by 6% a year in 2007-2009, according to governmental forecasts from the Medium-Term Expense Framework (CCTM) for 2007-2009. It says that the inflation rate will decline down to 7% by 2009. The same macroeconomic forecast shows that the monthly medium salary on economy will grow by about 12% in real terms, up to 2,860 lei (215 dollars) in 2009.

At the same time, the document stipulates that the foreign financed will be limited to new loans for financing of investment projects and no credits will be contracted to support the budget. Moldova will register a maximal budgetary deficit of 0.5% of GDP in 2007-08, according to the document, but many experts fear that this forectast is unrealistic.

...but current statistics show that industry is on the decline

On the other hand, official statistics reveal that industrial enterprises made production worth about 9.6 billion lei (about 595 million euros) in current prices in January-June 2006. The volume of industrial production has declined by 6.4% compared to the same period of last year due to the reduction of production volumes of enterprises making wines and destiled alcohol drinks, oil and fat, glass and glass items, paper and cardboard, and others.

4. Banking sector

Forward deposits in Moldovan lei declined...

Forward deposits in lei have dropped by 50.3 million lei or 1.2% in June down to 3,819,800,000 lei. This is the second reduction of forward deposits this year, after they declined by over 130 million lei in May. Many persons have withdrawn their savings from banks after speculations that the banking system will face a crisis generated by the crisis in wine sector.

At the same time, deposits in foreign currency have grown by 447.4 million lei (over 7%), up to about 6.2 billion lei due to the decline of supply of forward deposits in lei. The supply of credits released by commercial banks to economic agents and population has grown by over 140 million dollars, especially due to consumption credits worth about 80 million lei of the total contracted by population. It is worth to note in this context that currency reserves of BNM dropped by over 4 million dollars in July. The central bank has probably intervened on currency market and bought lei to lessen the growth of inflation.

5. Labour market

Government increased tariff salary for employees of real sector of economy...

The tariff salary for the 1st qualification categpry of workers in agriculture and forestry sectors, as well as for employees of enterprises with maximum 9 salary-earners will grow from 360 lei up to 500 lei starting July 1. The tariff salary for thr 1st qualification category for employees of other branches of national economy will be at the level of 700 lei, compared with 550 lei formerly. This remuneration is paid for the simplest, unqualified work and may be considered a minimal state guarantee. About two thirds out of 860,000 employees on country work in the real sector of economy.

At the same time, BNS data show that the medium monthly salary in national economy amounted to 1,563 lei (117.5 dollars) and rose by 28% compared with the similar period of last year. The highest salary in the period concerned - 3,674 lei (276.2 dollars) - was paid to employees of financial sector, followed by transportation and communications - 2,386 lei (179.4 dollars), constructions - 2,084 lei (156.7 dollars), industry - 1,930 lei (145.2 dollars), public administration - 1,771 lei (133.2 dollars). The lowest salary was paid to workers in agriculture and forestry sectors - 697 lei (52.4 USD), fish breeding - 1,056 (79.4 dollars), education - 1,291 (97 dollars), healthcare and social assistance - 1,266 lei (95.2 dollars).

Transdnistrian Conflict

Republic of Moldova, the international community will not recognize the Transnistrian referendum

On 28 July the Parliament of the Republic of Moldova adopted an official Declaration in which it condemned the intention of the Transnistrian authorities to hold in the autumn of 2006 a referendum regarding the independence of the region. According to the text of the Declaration, the referendum cannot be an expression of the free will of people, as it runs in breach of both the Moldovan Constitution and the international law. The Moldovan deputies expressed their conviction that the Transnistrian conflict can only be solved by peaceful means, through a genuine democratization of the political and socio-economic life of the region.

The Declaration calls upon the international community to support the efforts of the Moldovan authorities towards territorial reintegration, European integration, permanent neutrality and non-adherence to any military blocks. The Tiraspol administration will be held responsible for whatever consequences of the so-called referendum, whose results will not recognized by the international community, the Declaration reads.

Earlier, at the 18 July meeting of the OSCE Permanent Council, the European Union, USA, GUAM states and Moldova condemned the intention of the Tiraspol authorities to hold a referendum. According to a communique of the Ministry of Foreign Affairs and European Integration, the EU has disapproved of the unilateral decision of Transnistrian leaders, which will only complicate the conflict settlement process. The EU called upon Tiraspol to adopt a constructive attitude and return without delay to the "5+2" negotiation process. In their turn, the US qualified the intentions of Tiraspol authorities as unserious, and asked Russia to denounce the so-called referendum if it wants to be regarded as a neutral mediator in the Transnistrian conflict. At the same time, the US called upon the Russian Federation to withdraw its troops and weapons from Transnistria, in order to fulfill its 1999 Istanbul commitments.

The OSCE Chairman in Office, Belgian Foreign Minster, Karel de Gucht, also expressed his disagreement with Tiraspol's intention to hold a referendum. According to a communique of the OSCE Mission to Moldova, De Gught said that the OSCE will not support and will not monitor a referendum that questions the territorial integrity of Moldova. On the other hand, the European official added, the holding of a referendum in Transnistria will be possible only after such a decision is reached at the negotiations table and the necessary conditions are set into place for the vote to be free and fair.

On the other hand, according to news agency Info Prim Neo, which makes reference to international press, the Permanent Representative of the Russian Federation to the OSCE, Alexei Borodavkin, stated that Russia did not agree to statements that the planned referendum is "provoking" and "unserious". According to the Russian official, this measure needs to be regarded as a response to the latest developments in the Transnistrian issue. Earlier, the Chairman of the Foreign Affairs Committee of the Russian State Duma, Konstantin Kosaciov, stated in Moscow that "one will not be able to dispute the legitimacy of the referendum should it be held in a transparent and democratic method", noting that Russian observers will monitor the electoral process in Transnistria, regardless of the opinion of Chisinau or the West.

The US support the territorial integrity of Moldova

President Vladimir Voronin met on 26 July in Chisinau with the Assistant of the US Secretary of State, David Kramer, with whom he discussed, among other things, the Transnistrian problem. According to the presidential press services, the two discussed the efforts towards internationalization of the Transnistrian conflict settlement, noting that this is a "success of both sides". David Kramer reconfirmed that the US will not recognize the referendum regarding Transnistria's relations with Russia and Moldova and that the EU Member States will not send observers.

It is worth noting that during his second visit to Washington, Romanian President Traian Basescu discussed the Transnistrian conflict with US President George W. Bush during a meeting on 27 July. According to Info Prim Neo, which makes reference to international press, after the private discussions at the Oval Office in the White House with his Romanian counterpart, Bush stated with reference to the Black See area: "We discussed about Romania's neighbouring region and we gave assurance that the position of the US regarding Moldova is that of supporting the territorial integrity of Moldova". In his turn, Traian Basescu mentioned the need to isolate the internal processes in Moldova from external influences. The interlocutors expressed a common point of view regarding the negative influence of the Russian military presence in the Transnistrian region.

Foreign Affairs

Republic of Moldova - Council of Europe

The president of the Parliamentary Assembly of the Council of Europe (PACE), Rene van der Linden, has paid an official working visit to Chisinau. His agenda included meetings with Moldovan authorities, an address to the Parliament, meetings with leaders of parliamentary parties, representatives of NGOs. The PACE president told a news conference on totals of his visit that the CoE monitoring on Moldova will become deeper and will focus on implementation of adopted acts. He noted that Moldova must seriously get ready to become member of the E.U., in order to be sure that it will not be denied when its time to join this organisation will come. The PACE representative considers that Moldova's entry process will be long but this final perspective is certain for Moldova.

Republic of Moldova - European Union

Foreign ministers of E.U. member states have saluted the complete abolition of death penalty in Moldova.

The European Commission will report on opportunities of a facilitated visa regime for Moldova till the October-scheduled Meeting of the Council of Justice and Interior Ministers of the E.U. The possibility of facilitating the visa regime for Moldova and states in the Western Balkans was discussed at the meeting of the Council of Justice and Interior Ministers in Brussels. The council has invited the European Commission to launch consultations with E.U. member states in order to prepare the information needed to study the possibility of starting negotiations with Moldova on agreements regarding the facilitation of visa regime and readmission.

Tomasz Ciukaj, expert of customs and border management who has worked in Poland until now, was appointed to head the territorial office Chisinau of the E.U. Border Assistance Mission to Moldova and Ukraine.

Republic of Moldova - Romania

Romanian Prime Minister Calin Popescu Tariceanu said that "Romania has supported Moldova in order to speed up the entry of this country in the E.U., but it seems that the Chisinau authorities "go another way." He delivered these statements at a conference held at the Dimitrie Cantemir University. The Romanian premier recalled that Moldova was invited to participate as full rights member in the South East European Cooperation Process (SEECP) and the Central European Free Trade Agreement (CEFTA), steps that accelerate its European integration. According to Tariceanu "the Moldovan population and authorities must decide if they really want the European integration and must take supported efforts to back this desideratum."

Republic of Moldova - Russian Federation

While the Chisinau authorities say that many proposals on resumption of exports of Moldovan production to the Russian Federation have been tabled, the chief sanitary doctor of Russia, Genadi Onishchenko, affirms that "Moscow has almost lost the hope regarding restart of dialogue on resumption of wine imports from Moldova." He notes that "neither Chisinau, nor Tbilisi proposed a meeting on this issue, while the quality of alcohol production from the two countries does not improve."

Moldova in the world

The International Monetary Fund and the European Union will provide a financial aid to Moldova to reduce the impact of higher gas prices and Russia's restrictions against Moldovan wines. This statement was delivered by head of the IMF Mission to Moldova Thomas Richardson, who has mentioned the seriousness of the external shock that hit the Moldovan economy. The IMF representative noted that foreign donors will release preferential credits and grants to assist Moldova.

Studies, Analyses, Comments

Macroeconomic trends in 2006... and forecasts
Iurie Gotisan, 31 July 2006

The country's economy has grown by 6.2% in the first half of this year. This is a pretty strong growth, given the internal and external shocks faced by economy in the period concerned

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European integration remains a priority of the Republic of Moldova
Igor Botan, 31 July 2006

The spring-summer session of the Parliament has ended, as usually, with totals made by country's leadership. In spite of optimistic reports, political developments in Moldova in the first half of 2006 and especially in July have been marked by serious uncertainties

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