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Activity of Public Institutions

Government
Presidency

National particularities of declaring incomes and estate by Sergiu Grosu
"Independence" of Moldovan economy by Iurie Gotisan

Activity of Public Institutions

Government

1.1. Appointments. Reshuffles

The Government has proposed the appointment of political analyst Nicolae Chirtoaca as Moldovan Ambassador to the Unites States and the assignment of Justice Minister Victoria Iftodi as Moldovan Ambassador to France.

The executive has proposed the appointment of Eduard Melnic, deputy rector of the Academy of Public Administration, as extraordinary and plenipotentiary ambassador of Moldova to Latvia, where Moldova has recently opened an embassy.

On August 16, the Government relived Oleg Cusnir from the post of director of the Casa Presei complex. It did not explain why, saying as usually "on basis of own demand."

1.2. Decisions

• Decision approving the action plan on use of conclusions of the Report "Thawing a frozen conflict: legal aspects of the separatist crisis in Moldova" by the Association of the Bar of the city of New York, in the country's reintegration process. The plan contains 15 sets of actions which will be implemented in 2006, of which the most relevant are: - synthesis and analysis of documents on settlement of the Transnistrian conflict and withdrawal of Russian troops and ammunition from Moldova's territory; - information of international community about developments in the Transnistria settlement process; - notification of foreign factors over this report; - calling upon parliaments of the European Union and the U.S. Congress regarding the organisation of parliamentary hearings on settlement of the Transnistrian conflict; - dissemination of the report summary as an official document of the U.N. General Assembly; - raising the awareness of foreign business circles over conduct of illegal economic activities in the Transnistrian region of Moldova; - elaboration of a course on Transnistrian problem for institutions of higher learning on basis of the report concerned; - stimulation and facilitation of debates on the report in civil society, etc.

• Decision on socio-economic development of Moldova and execution of the action plan for the implementation of the 2005-09 action programme of the Government called "Modernisation of the country - welfare of people" in the first half of 2006. A negative influence of foreign factors, certain accomplishments in enduring a macroeconomic stability, improving the business environment are observed. The Government names the following problems for economic development: decline of exports, of volume of industrial production and transported goods; intensification of inflationist processes; unfavourable climatic conditions for agriculture; decline of foreign investments, growth of prices of fuels. Following measures aim to resolve the problems or to reduce the negative impact:
  • reduction of inflation through fiscal and structural policies;
  • promotion of industrial policy and creation of a quality infrastructure;
  • acceleration of privatisation processes and reorganisation of industrial enterprises in order to develop them;
  • start and active implementation of the process of adjustment of national standards to the E.U. norms;
  • intensification of efforts against functioning-related faults of agricultural market - land market, capital market, production market, market of agricultural production;
  • revision of the existing system of subsidies in agriculture and redirection of limited resources of state from subsidising of recurrent costs for certain products or productive expenses with a short-term effect to support of investments, services and agricultural infrastructure;
  • intensification of dialogue with private sector regarding business environment and transparency of changes in regulation framework;
  • drafting of sectoral strategies and strategy on attraction of investment and export promotion;
  • intensification of negotiations with the Russian Federation within existing mechanisms;
  • speeding up the implementation of recommendations of the European Commission in a move to obtain autonomous trade preferences; intensification of the dialogue with the European Commission in order to obtain facilities for exportation of Moldovan wines to the E.U. markets;
  • optimisation of the wine quality control system in order to adjust it to existing quality standards on markets; identification of quality and parameters in effect on markets and capacity of domestic producers to respect these requirements, drafting of individual or group strategies on joining foreign markets;
  • optimisation of use of energy resources with the purpose to reduce the costs and to maximise the efficiency;
  • ensuring an individual record of payers of taxes to the state social insurance fund, establishing and payment of pension of citizens in dependence of their contribution to the pension system; individual record of payers of taxes to the health insurance fund, etc.

• Decision on industry development strategy till 2015. It establishes the basic principles, objectives and priorities of development of this sector, mechanisms of implementation, ways of structural reformation of the sector, implementation of an efficient policy in the field of science and innovations, creation of an efficient infrastructure for industry and implementation of information and communication technologies.

• Decision approving the agri-food development strategy for 2006-2015. The document is needed to help improving the situation in the field because recent estimates reveal that the cost of long-term assets in this sector has declined from 13.4 billion lei in 1998 down to 3.8 billion lei in 2005, while the agriculture has attracted only five percent of the total of investments in national economy in the past five years.

• Decision approving the action plan on improvement of situation in the traffic security sector till 2009. The plan is part of the E.U. objectives to reduce the number of people killed in traffic accidents by 50 percent by 2010 and it calls for a better normative framework of training and re-qualification of motorists, endowment of mobile teams of traffic police with modern unlocking equipment, installation of tahographs in national buses, improvement of special anti-alcohol and anti-drug training programmes for detected persons. According to data of the Interior Ministry, about 2,000 traffic accidents took place in eight months of 2006; more than 200 persons died and about 1,800 people were hurt.

• Decision approving the regulation of the governmental commission for equality between women and men. The commission, as a consultative and coordinating body in charge with the implementation of the state policy ensuring equal rights and chances between women and men will have a series of competences aimed to promote an integrated approach of equality between women and men, to improve the situation of women and men in all fields of social life and to grant a special social, economic and political status to women like the one the men hold de jure and de facto.

• Decision on expertise of corruptibility of draft legislative acts. According to the regulation approved under the same decision, the expertise of corruptibility will assess the accordance of draft legislative act with national and international anti-corruption standards aimed to identify the norms favouring or capable to favour the corruption and will end with recommendations on exclusion or reduction of effects of corruption. Draft legislative acts regulating relations in the fields of constitutional and administrative law, justice and interior affairs, human rights and freedoms; economy and trade, budget and finances; education, culture, religious denominations and mass media; labour legislation; social welfare, healthcare and family will be examined against corruption. The expertise will be made accordingly to a methodology that the Centre for the Struggle Against Economic Crimes and Corruption must draft¹.

• Decision approving the Moldova-NATO Individual Partnership Action Plan (IPAP). The document published on August 25, 2006 establishes that the National Commission for the Elaboration and Implementation of IPAP will draft the National Programme on Implementation of IPAP and the list of needs of foreign assistance; will create working groups in charge with the following fields: a) political security and international cooperation; b) military security; c) crisis management, combat of terrorism and organised crime; d) democratic reforms and civil/democratic control on Armed Forces; e) economic and energy security; f) border security; g) security through science and environment protection; h) financing of reforms. The Ministry of Foreign Affairs and European Integration will coordinate the activities related to information of public opinion about composition and implementation of the programme.

• Decision establishing rises of salaries of function for public functionaries with permanent access to the state secret. It establishes rises for permanent access to state secret of public functionaries working in central and local public administration authorities, law courts and prosecutor's office financed from the national public budget, who enjoy access to secret information. The additions are between 10 and 20 percent of the salary of function and they are paid starting December 1, 2005.

• Decision approving the regulation on calculation of minimum consumption basket. This new regulation maintains the same sections of expenses: food products; manufactured goods; services. But it also stipulates a new element - calculation of season fluctuations in consumption of food products. Some consumption rates have been increased. Although developers of the document say that the new act aims to establish a real minimum consumption basket, representatives of trade unions do not warm this regulation. The Confederation of Moldovan Trade Unions (CSRM) says that the document does not bring anything new in the mode of establishing the norms and the mode of calculating the minimum consumption basket for population. It is feared that the implementation of the regulation could worsen the situation regarding social protection of citizens and could have a negative influence on the process of arguing and establishing the minimum social guarantees: salaries, pensions, scholarships, indemnities and other social payments. CSRM regrets that the executive continues to adopt normative acts that affect the socio-economic interests of salary earners by neglecting the opinion of social partners and demands the urgent elaboration and adoption of a draft law on minimum consumption basket.

• On August 3, the Government issued the Decision # 891 approving the action plan on use of conclusions of the Report "Thawing a frozen conflict: legal aspects of the separatist crisis in Moldova" by the Association of the Bar of the city of New York, in the country's reintegration process. The plan stipulates among others a synthesis and analysis of documents on settlement of the Transnistrian problem and withdrawal of Russian troops and ammunition from Moldova; information of the international community about developments in the process of settlement of the Transnistrian conflict; submission of a joint appeal of GUAM to the head of the U.N. General Assembly seeking the additional inclusion of the problem of conflicts in the Black Sea and Caspian Sea region in the agenda of the 61st session of the General Assembly; raising the awareness of foreign factors over this report; dissemination of the report summary as an official document of the U.N. General Assembly; raising the awareness of foreign business circles (companies, banks, etc.) over consequences of holding illegal economic activities in the Transnistrian region of Moldova, including through the report on this topic; analysis of the report and elaboration of some approaches within academic and university environment, elaboration of a course on the Transnistrian problem on basis of the report for institutions of higher learning; information of functionaries of local public administration about this report, etc.

• Decision on some measures for the use of secondary wine products. According to the document, a proposal of the MoldovaVin Agency regarding the making of weak alcohol drinks and distilled drinks on basis of fermented juice of grape marc. The MoldovaVin Agency will draft a regulation on making of weak alcohol and distilled drinks, will approve the normative and technological documentation on their making.

• Decisions approving draft laws. The Government has approved draft laws on limited societies; arbitrary judgment (arbitrage); legal status of adoption; modification of the law on the National Commission for Securities (reorganisation of CNVM); rise of sanctions for violation of copyrights; modification of the Code of Penal Procedure and the law on remedy of the damage caused by illicit actions of penal investigation bodies, prosecutor's offices and law courts (rise of compensation for illicit actions).

1.3. Sittings. Decisions. Declarations

Concerns with situation in energy sector

A meeting between prime minister and a group of German investors has discussed the perspective of development of bio fuel industry in Moldova. The director-general of Bio Company Raps of Germany said that there are many opportunities of developing the bio fuel industry and this company is building a rape oil making plant in the city of Lipcani. The enterprise is expected to open by late 2006. At the same time, the company will invest in growing rape, including by increasing the sorts, mechanising the harvesting process. Vasile Tarlev thanked the German entrepreneurs for their wish to cooperate with Moldova and expressed readiness to grant the necessary support for implementation of joint investment projects.

A sitting on implementation of gas pipe building projects in Moldova has examined the implementation of the national programme in the field, ascertaining that all districts of the country have elaborated and approved local gasification programmes. As of January 1, 614 localities were supplied with gas (about 40 percent of all establishments). Gas pipes will be built in at least 190 localities this year and over 71 million lei is foreseen in the state budget for this purpose. The prime minister outlined that the construction of gas pipes Balti-Ungheni, Tocuz-Mereni and of the electricity distribution line Novodnestrovsk-Balti is a priority for ensuring the energy security of the country.

Interventions in healthcare sector

The Government has decided to insure the people who look after 1st-degree disabled children (about 500 persons) at home and mothers of at least seven children (about 300 families). About 4 million lei will be additionally allocated in 2006 for this purpose.

Convoking a meeting with managers of health institutions from Moldova, the prime minister said that quality, transparency and an accessible price of drugs can be obtained by using the centralised drug purchase mechanism. Vasile Tarlev said that stricter requirements will be introduced for medication providers "in order to exclude intermediaries from market." The Ministry of Health and Social Protection was asked to hold auctions and to sign contracts for the purchase of state-subsidised medications and drugs needed by medical institutions, starting September 1 in future.

It should be mentioned that the Moldovan League of Pharmacists claims that Moldovan pharmacies lack cheap medications, as more than 90 percent of needs are covered from imports. According to representatives of the league, the internal prices of drugs have grown by 173% on average, while the imports have dropped by 40% compared with the similar period of 2005. Thus, a deficit of cheap first-need drugs was registered. Prices have grown because VAT facilities have been annulled; requirements for the implementation of the automatic information system State Nomenclature of Drugs (purchase and installation of a special soft, required latent band on every drug, personal costs, etc.) have been introduced.

Implementation of "SALT" Programme

According to press reports, the Ministry of Education and Youth has negotiated with a British company the acquisition of more than 10,000 computers worth about 55 dollars. As many as 360 teachers attended a 10-day training before the new academic year in order to learn education soft for subjects, within the Salt Programme. Training courses for directors of educational institutions and functionaries of general education directorates will be organised starting September, so that 10,000 local teachers become local trainers by end of the year. According to data of the relevant ministry, the implementation of the 2007-09 action plan on accomplishment of the "Salt" Programme will require about 400 million lei, of which the Ministry of Finance has plans to allocate more than 100 million lei the next three years.

The Centre of Information and Education Communication Technologies opened on August 30 to ensure the creation of a permanent training system for informatics teachers; to educate teachers of other subjects in the field of implementation of information and communication technologies; to elaborate education software for various subjects; to elaborate and publish didactic materials for informatics teachers; to elaborate electronic didactic materials for subjects; to monitor the use of Internet and implementation of information and communication technologies in education sector; to create and administrate an educational portal; to create databases to be used for the monitoring and administration of education system, etc.

Draft budget law for 2007

Decision-making officials of the Government have examined the main provisions of the draft budget law for 2006. The principles of budgetary-fiscal policies for next year adopted by Parliament in late July are novels of the draft. The new elements include: - the reduction of income tax; - the possibility to deduce more expenses; - the exemption of economic agents that invest two million dollars and reinvest 80 percent of their profit from income tax for a 3-year term and the 2007 budget foresees facilities for further investments of 5, 10, 20 and 50 million dollars; - micro-financing enterprises will hold the same rights and obligations like banks, will be exempted from income tax for a 3-year term, if they release credits for over three years. No essential rises are proposed for investments and the planned amount exceeds 300 million lei. The limitation of investment possibilities is argued by growth of expenses related to dearer natural gas and implementation of law on salary in budgetary sector.

3. Presidency

2.1. Decrees

Vladimir Voronin has signed the decree on assignment of Nicolae Chirtoaca as Ambassador of Moldova to the United States.

Several persons have been awarded state orders for contributing to renovation of the Eternitate Memorial Complex. The chief of state has awarded the Honour Order to Anatoli Petrovski, director-general of the Textile Corporation KROSNO from Tyumen, the Russian Federation, and to Vasile Ursu, ad-interim mayor-general of the Chisinau municipality. Under Article 171 of the Law 123 from July 30, 1992 on state orders of Moldova, the Honour Order, which was introduced in 2002 at the initiative of the chief of state, is awarded for praiseworthy contribution to strengthening the statehood, promotion of reforms and democratic developments; very fruitful activity in state bodies and social field; special merits in developing friendship and cooperation relations between Moldova and other states, notable contribution to integration of the republic into international structures; for intense peacekeeping activity; as a sign of appreciation for charity and sponsoring activity, for permanent support for social-humanitarian actions.

2.2. Sittings. Decisions. Declarations

Recommendations for activity of local public administration

The chief of state attended on August 4 the first sitting of the collegial council of the Ministry of Local Public Administration and formulated recommendations on activity of the ministry. Vladimir Voronin reiterated the importance of the institution and indicated the need of establishing acts and orders that the ministry can issue, nature of information solicited from local and district public bodies. The chief of state recommended the ministry to revise the package of documents circulating at the level of local and district public authorities regarding their real reasonability and necessity; to intensify the efforts for information of the system and ensuring a direct interaction between relevant ministry, Government and bodies of territorial public administration; investigation of complaints of citizens, reasons of complaints unsettled at level of local public authorities. According to the chief of state, employees of the ministry must pay more attention to the implementation of state programmes in territory, including of the National Programme "Satul Moldovenesc". Assisting the creation of free economic zones and technological parks in many districts of the country will be a current task of the ministry.

On August 28, the president of Moldova chaired a sitting on prospects of projects on development and modernisation of the Chisinau municipality. The chief of state highlighted that the ongoing process must continue in a supported pace, continuing or starting the implementation of various projects: the model quarter, the construction of the northern bus station, arrangement of the central cemetery, renovation of streets, fountains, highways, arrangement of the Bic river, purchase of vehicles for public transportation and snow cleaning equipment, street illumination, building of an elderly asylum, renovation of centres for minors, etc. A special attention will be paid to quality of works, principles of selection of entrepreneurs and mechanisms of accumulation of finances for projects from the state, municipal budgets and contribution of sponsors.

Concerns with situation in winemaking and vine growing sector

Vladimir Voronin has chaired a sitting with the participation of prime minister, decision-making officials of the Government and Presidency, which focussed on preparation of the vine growing and winemaking sector for the grape harvesting and acquisition campaign and for the 2006 wine making season. The chief of state stressed that the conduct of the grape harvesting and acquisition campaign in the due time has a major importance for national economy and this fact discourages the strategic role of viticulture and winemaking industry. Voronin proposed grape processing enterprises to control the respect for the national regulation on use of pesticides, other normative acts regulating this sector, jointly with the Ministry of Agriculture and Food Industry, MoldovaVin Agency, National Institute for the Protection of Plants, and other competent bodies. Also, he opted for an urgent creation of the national laboratory for certification of quality of alcohol drinks for exportation within the National Institute of Vine and Wine, so that to obtain international accreditation soon and to help Moldovan wine production join western markets. The president reiterated the need of continuing the diversification of markets for domestic wines, the reduction of exports of raw wines and wines in bulk, enlargement of vineyards of European sorts.

Vladimir Voronin has met with members of a delegation from the people's government of the Chinese province of Yunnan and saluted the presence of China's representatives, saying that the visit will improve knowledge of business opportunities in winemaking and vine growing sector in a move to identify new directions of advantageous cooperation. A Moldovan Wine House will open in this region soon. China's representatives noted that the high quality and reasonable price of Moldovan wines creates real premises for an extended presence of Moldovan products in China.

Visit to Moscow

On August 8, the president of Moldova met with his Russian counterpart in Moscow. The meeting, which was reportedly expected to have a crucial importance, was described as "working". Although it was reported that the meeting lasted about 2 hours, press releases said that the sides have discussed the Transnistrian problem and the Moldova-Russia bilateral relations. They agreed to restart the activity of the Moldovan-Russian intergovernmental commission in order to resolve the existing problems in relations between the two countries (especially of humanitarian nature), to take joint actions aimed to intensify the commercial-economic cooperation.

Vladimir Voronin has convoked a working sitting on outcome of his visit once he came back to Chisinau and revealed details about his meeting with Vladimir Putin. The Moldovan president ordered the elaboration of measures aimed to settle the existing difficulties and to find solutions to unsolved problems.

Participation in festivities dedicated to the national holiday the Day of the Republic²

The president of Moldova has attended most of manifestations dedicated to the 15th anniversary of Moldova's independence. The chief of state addressed a festive sitting on August 26, saying that:

• The Moldovan nation has demonstrated that it deserves its own statehood;
• Moldova has fully self-affirmed as state, as society, as economy, as country with own profile that cannot be confounded;
• All political forces of the country which have opposite values and programmes have reached a consensus on Moldova's future for the first time after many years;
• The European integration is our national idea, it means above all the economic modernisation of Moldova, the building of a democratic, fair, socially developed state;
• The Transnistrian settlement means the reintegration, involvement of more than half a million citizens of Moldova in the civil, social and political life, not a political regain;
• Moldova is at the crossroad of most productive contact ways between different civilisations.

On occasion of the holiday and as a sign of gratitude for merits of those who voted the Independence Declaration, Voronin has posted intention to propose equal rights and facilities for all lawmakers of the 12th Supreme Soviet and parliamentarians from all legislatures³.

Interview for BBC

Vladimir Voronin has delivered a series of statements to BBC regarding important problems of interior and foreign policy:

• The basic principles declared on August 27, 1991, all other attributes of sovereignty of a state have been generally fulfilled, while the lack of territorial integrity is the only fault;
• The incumbent president of Moldova will never accept a compromise for the sake of any advantage, if this compromise would limit the independence of Moldova;
• It does not make any sense to join the E.U. if we must cede the independence of the country for this purpose;
• The Kozak Memorandum and what has happened three years ago were discussed at the recent meeting with the Russian president like "between two men" and the necessary conclusions were drawn;
• The Russian-Moldovan commission will discuss the embargo on Moldovan wine exports and the wine deliveries to the Russian Federation will restart soon;
• No troops must stay in Moldova while the "peacekeeping" forces will be replaced soon with civil or military observers;
• The Russian leadership said that the military contingent in Transnistria does not count and they do not decide anything, and this contingent will be evacuated when a solution to Transnistria is found;
• Romania's entry in the E.U, will be an important event for Moldova, while Romania may be a model on the European integration way;
• The leadership of Moldova is aware that Romanian President Traian Basescu delivers statements on speeding up Moldova's entry in the E.U. "with goodwill", but he did not coordinate these declarations with the Chisinau authorities;
• Moldova follows the way of maximal liberalisation of entrepreneurial activity, respecting the market economy principles, with Moldovan communists "fighting against poverty, not against wealth";
• Moldova is a neutral state and it does not want to join NATO, but it cooperates with this organisation within the Partnership for Peace Programme, this cooperation being positive for the National Army.

Economic Policies

1. Inflation and prices

We had deflation in July...

The inflation rate declined by 0.4% in July compared with June 2006. This was mostly due to a decline of prices of food products by 3.8%. Consumer prices of manufactured goods and services granted to population have grown by 1.3% and, respectively, 3.7% in the period concerned.

…but the inflation will grow again at this beginning of autumn

We fear that the Government and the National Bank of Moldova could fail the 10% maximum inflation target for this year. Many economists have already contested the forecast, while statistics reveal that the cumulated inflation rate for the first seven months of this year has already reached 7%, though we had a deflation of 0.4% in July, this being actually typical for summer, when prices of most of fresh fruits and vegetables are on the decline.

And it will be between 12.5% and 13.5% at the end of this year...

However, the average rise of natural gas tariffs by over 50% burdened by higher administrative prices of electricity, water, transportation, fuels, etc., could increase the inflation up to two figures at the end of this year. The expansion of consumption credit contracted by population from commercial banks could be added here and this perpetuates the inflationist expectations in a bigger or smaller measure.

2. Public finances

State budget incomes rose by 17.3% in the first seven months...

According to official statistics, incomes of over 5.51 billion lei (323 million euros) were raised to the state budget in January-July, by 17.3% more than in the similar period of 2005. At the same time, about 125 million lei was attracted in January-June 2006 for implementation of investment projects.

Authorities of the Government, Parliament and Presidency discussed and analysed the draft state budget law for 2007 in August. According to the Ministry of Finance and preliminary forecasts, the state budget for next year will include about 19 million lei (some 1.43 billion dollars) in incomes, while the expenses will be established after consultations with relevant ministries and local public administration.

3. Real sector

Industrial production declined by 6.7% in January-July 2006…

Industrial enterprises in Moldova made production worth about 11.25 billion lei (659 million euros) in January-July, by 6.7% less than in the similar period of 2005. This decline was mostly due to the crisis that affected the wine industry and had negative consequences on other sectors of industry, according to many experts.

... while agriculture grew by only 0.6%

At the same time, the agri-food industry has grown by 0.6% in the first half of this year. The lowest rise in the past years is explained through a decline of alchol and cooling drinks by over 25% due to the Russian embargo on Moldovan wine production. Nor the agriculture makes us happy. Official forecasts regarding a 3.6% growth of agricultural production this year could be failed after the agriculture rose by 1.8% only in the first half of this year, up to 2.48 billion lei (some 190.8 million dollars).

Government will have to update its forecasts...

The Government, which administrates the forecasts, will have to update them and to propose more realistic values. Indeed, the authorities said last week that the official forecasts for some macroeconomic indicators - GDP, inflation, etc. - will be reduced, but this will happen only after debates on state budget for next year are completed. In addition, estimates of the CIS Committee for Statistics reveal that the economic growth paces this year will be lower than in 2005 and 2004 in half of member countries. The GDP will grow by 6% on average in CIS in 2006, compared with 6.8% in 2005, 8.1% in 2004.

4. Financial-banking sector

Assets of banking system are evaluated at about 20 billion lei...

The total assets of the Moldovan banking system rose by 11.42% in January-July 2006, up to 19.99 billion lei (about 1.5 billion dollars). In comparison with the similar period of the precedent year, the assets have grown by 32.6%. According to a bank efficiency rating worked out by the rating and estimation agency Estimator-VM, the commercial bank Moldova-Agroindbank (MAIB) was ranked the 1st place in a top for the first half-year. MAIB has raised the largest net revenue in the banking system - 92.11 million lei - and was rated 2.398 points. The Savings Bank was ranked the 2nd place and was rated 1.343 points, as it raised a net income of 33.16 million lei.

Bank deposits have declined...

At the same time, commercial banks in Moldova granted credits in the amount of 7.17 million lei in the first half of this year, by 25.1% more than in the first six months of 2006. On the other hand, economic agents and population created deposits worth 601 million lei in July, by 118.6 million lei less than in June. More and more people leave for holidays on summer and enterprises start buying foreign currency for winter. The supply of deposits in banking system exceeded 12.73 billion lei in late July and they declined by 125 million lei (1.0 percent) compared with June 2006, especially due to reduction of deposits in foreign currency by 142.5 million lei (2.3%).

5. Foreign sector

Exports dropped by 8.5% in the first half of this year...

Russia's embargo on exportation of Moldovan agri-food products was one of factors that halted the commercial expansion. Exports to CIS have declined the most - by 18.7%, and this fact reduced their share in the total of external deliveries from 50.7% in January-June 2005 down to 45% in the similar period of 2006. At the same time, the export to the European Union was estimated at 147.6 million dollars and declined by 0.1% compared with January-June 2005. Exports to Central and Eastern Europe have grown by 22.3% in the period concerned. At the same time, imports were estimated at over 1.6 billion dollars and they rose by 14.8% compared with the first half of 2005.

...while exporters of agri-food products suffered the most...

If making a synthesis of structure of exported commodities, we consider that makers and exporters of agri-food products have been affected the most, as this category of goods has declined by about 11% compared with January-June 2005 and it covers more than half of all exports. Imports have grown particularly due to a 1.4-fold rise of imports of mineral products and energy agents, which cover about 27% of all imports.

6. Labour market

Salary arrears have grown...

Salary arrears in national economy exceeded 113 million lei in late July and they rose by about 17 million lei compared with earlier this year. The largest salary arrears are registered in agriculture and processing industry. At the same time, the medium salary on economy amounted to 1,754.2 lei in July, by 70 lei less than in June 2006. The average wage in budgetary sector accounted for 1,561.2 lei and declined by 318.3 lei compared with the precedent month, while the medium salary in real sector has grown by 49 lei, up to 1,843.8 lei.

Transdnistrian Conflict

Referendum on background of explosions
Igor Botan, 31 August 2006

Preparations for the September 17-scheduled referendum on joining of Transnistria to Russia or reintegration into Moldova are being finished in the eastern breakaway enclave of Moldova

»»»

Foreign Affairs

Republic of Moldova - Council of Europe

On August 8, the European Court of Human Rights sentenced Moldova again in the case Ermicev vs Moldova (violation of Article 6 - right to a fair trial). The plaintiff has complained of annulment of a final judgment in his favour regarding a real estate deal. The ECHR observed that a higher jurisdiction has annulled a final and mandatory judgment awarding victory to the plaintiff after a revision procedure based on an appeal of the prosecutor who does not fall under any term and, therefore, the decisions may be permanently discussed. The plaintiff has faced a legal uncertainty for a long period after annulment and so the legal security principle and the right to access to a law court were violated. The Court considers that the sums awarded to the plaintiff under this judgment may be considered goods and the annulment of the final judgment is an attempt on the plaintiff's right to respect for his estate. Thus, the Court ruled the violation of Article 1 from Protocol 1 to the Convention. The ECHR ruled that the plaintiff receive 29,000 euros, which covers the market price of his apartment in litigation, 2,465 euros in pecuniary damage, 2,000 euros in non-pecuniary damage and 300 euros in costs and expenses.

Republic of Moldova - European Union

The European Commission has decided to release a 10-million-euro financial aid to Moldova to support the budgetary balance and to ensure the food security. The grant within this programme will account for 9.2 million euros, while the remaining amount will be a technical credit released under preferential conditions. The money will be spent to sustain the agriculture, for social protection, modernisation of management of public finances.

The special representative of the E.U. for Moldova, Adriaan Jacobovits de Szeged, has held consultations on the Transnistrian problem with officials of the Russian Foreign Ministry. According to a representative of the Russian Foreign Ministry, the E.U. dignitary "was informed about Russia's efforts to maintain the stability" in the Transnistrian region, actions aimed "to persuade the conflicting sides to adopt a stance capable to contribute to the conflict resolution." The sides opted for respect for the OSCE principles on settlement of local conflicts and taking of completions to the documents adopted earlier by participants in the Transnistrian settlement process into consideration.

The E.U. has allocated a 34-million-euro grant to Romania within a transborder cooperation programme. Seven million euros out of this grant will be spent for the neighbourhood programme between Romania and Moldova. The Mediafax news agency reported that the funds aims to support the economic development of border areas of Romania, in cooperation with border regions of neighbouring countries, by intensifying the transborder cooperation between public and private sectors and between persons.

The findings of a recent survey by the European Commission (Eurobarometre) reveal that a relative majority (45%) of the E.U. population supports the enlargement, but a high number (42%) of respondents do not warm it. The ten new member states support the enlargement very much.

Republic of Moldova - Romania

On August 13, the Romanian president delivered a series of statements on relations with Moldova, when he attended the opening of a summer school for youth called Romanian Community and European Entity, at the Eforie resort. He said that the Romanian Parliament will receive two draft laws on Romanians from outside by late September: a law on awarding of Romanian citizenship and a draft law on Romanians from other countries. Traian Basescu noted that he intends to speed up the awarding of Romanian citizenship to ethnic Romanians who reside neighbouring states, so that they be able to benefit of advantages of Romania's entry in the E.U. He underlined that the Romanian Foreign Ministry is waiting for as many as possible projects from Romanians from other countries in order to finance them. According to press releases, the Romanian president criticised the policy of Chisinau aimed "to mystify the history and culture," "to deny the Romanian language," etc.

Romanian Foreign Minister Mihai Razvan Ungureanu has said at the summer school of TNL in Mamaia that Moldova should have a "pragmatic thinking", as Romania is the European chance of Moldova. According to the Mediafax news agency, the "problem of Bucharest-Chisinau relations is treated with maturity and fewer emotions," with the Romanian authorities being interested in supporting "a democratic evolution in Moldova." Ungureanu reiterated that Romania is the European chance of Moldova because it is the only member state of the E.U. with which Moldova will share a border. As regards the "Transnistrian issue", the Romanian foreign minister said that Romania analyses the "potential danger of existence of an illegitimate zone at only 200-300 kilometres from border" and solutions to such a problem are being considered, but Chisinau does not show opening in this respect.

The Romanian foreign minister has stated at a TV programme on the TV channel Realitatea TV that Moldova and Romania are two sovereign states with one nation and the dialogue between the two countries are not held from arrogant positions. Mihai Ravan Ungureanu noted that a more intensive cooperation is discussed at all meetings with Moldovan officials, aimed to speed up the European route of Moldova, denying the statements that an offer seeking the merger of the two states was launched. According to the ministry, Bucharest respects the territorial integrity of the neighbouring state and proposes only help for European integration. Ungureanu stressed that Romania could be a good neighbour and ally of Moldova for integration into the E.U., with Bucharest standing ready to provide assistance for adjustment of legislation and avoidance of some mistakes in the process of approaching the E.U. He evoked the quality of institutions in charge with integration among main current problems of Moldova.

Romanian Defence Minister Teodor Atanasiu has told the summer school of PNL that the relations between Romania and Moldova are pretty cold "because the Chisinau authorities do not consider Romanians brothers." The minister added that Romania has managed to persuade the ally countries both at the E.U. and NATO levels that the solution to Transnistria cannot be the same as to Kosovo and a single solution to conflicts from the European region must not exist.

Romanian Minister of Economy and Trade Codrut Seres stated that Moldova has asked Romania to deliver electricity in 2006-2007 for emergencies. The Romanian authorities have received the request of Moldova but they avoid responding so far. The minister noted that Moldova owes about 30 million euros to Romania for previous electricity deliveries.

Republic of Moldova - Russian Federation

Moldova's debt toward the Russian Federation amounted to 144 million dollars on January 1, 2006. The basic debt is 122 million dollars, while the interest afferent to loans accounts for 22.6 million dollars. Moldovan minister of finance said that the debts toward Russia are loans released to the Chisinau government starting 1992-1993 to pay for energy resources. Pop noted that 30 million dollars out of the total debt represents loans granted to Transnistria, but Chisinau has assumed these debts in exchange for Moscow's consent to restructure bilateral debts via the Paris Creditors Club. He added that the Moldovan government will negotiate soon with the Russian authorities the revision of interests on some debts toward Russia.

The Transnistrian mass media said that the electoral commission in Tiraspol has discussed the preparation for the September 17 referendum on relations with Moldova. The commission considers that a polling station could open in the representation of the unrecognised Transnistrian Republic in Moscow.

The official representative of the Russian Foreign Ministry, Mikhail Kaminin, has summarised the bilateral relations with Moldova in an interview with the RIA Novosti news agency. According to Kaminin, Russia continues to be one of main commercial-economic partners of Moldova, as this country covers about 22 percent of the volume of external economic activities of Moldova. In January-May 2006, the cargo transportation dropped by 4 percent, compared with the similar period of 2005, down to 375.6 million dollars, while the main factors that influenced the reduction of Russian imports in Moldova included the decline of exports of alcohol drinks (by 39 percent) and of ferrous metals from Transnistria (by 54 percent). Russia's investments in Moldova's economy exceed 200 million dollars and more than 400 enterprises with participation of Russian capital are registered in Moldova. The Russian official considers that the common vector of development of Russian-Moldovan cooperation does not correspond to the strategic partnership and a clear political willingness for a long-perspective activity; constructive approach of problems based on respect for reciprocal interests must help combat the negative trends.

The Russian mass media has quoted the head of the Russian sanitary service Rospotrebnadzor, Gennady Onishchenko, as saying that only quality production of Georgian and Moldovan winemakers will be on sale in Russia, while the counterfeited wines will not be accepted on Russian market. Onishchenko noted that "good, quality wines only will come back, if they are accepted." According to Onishchenko, analyses revealed that 9 out of 10 bottles on sale were counterfeited and 57 percent of Moldovan wines and cognacs tested at Russian laboratories unfit the sanitary norms. For these reasons, more than 100,000 litres of wines imported from Moldova have been in Moscow alone.

Moldova in the world

Experts of the State of World Liberty Agency have released a new World Liberty Index, with Moldova being ranked the 93rd place among 159 states.

According to a report released by International Crisis Group on August 17, Moldova's future is uncertain. The document reveals that the Chisinau governance has posted little willingness to eradicate corruption and to improve the business climate, and it seems that its policy on Transnistria is based on rhetoric rather than on a commitment. International experts recommend the E.U. to provide more technical assistance for implementation of reforms in Moldova, with the condition that our country demonstrates a real willingness to use this support efficiently.

Israel's Parliament (Knesset) has created the Parliamentary Friendship League Israel-Moldova. According to the Ministry of Foreign Affairs and European Integration, the Friendship League will be headed by Moldovan-born politician Avigdor Liberman, chairman of the Party Israel - Our Home.

Studies, Analyses, Comments

National particularities of declaring incomes and estate
Sergiu Grosu, 31 August 2006

The Central Commission for the Control (CCC) of declarations on incomes and properties released on August 25 some data on estate of first-ranking dignitaries of Moldova to mass media

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"Independence" of Moldovan economy
Iurie Gotisan, 31 August 2006

We should note from the very beginning that the economic independence of Moldova is still far from being real, even after 15 years of political independence. It is important to assess the initial conditions of economic reforms in order to paint a more detailed and ampler picture of the current economic deficiencies of Moldova

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