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Activity of Public Institutions

Parliament
Government
Presidency

Republic of Moldova shall join EU one day, somehow… by Igor Botan

Activity of Public Institutions

Parliament

1.1. Legal acts

Law on mortgage. The law establishes principles and rules regulating the primary mortgage market, legal relations relating to this process and to the appearance, validity and cessation of mortgage, exercising of mortgage rights, as well as protection of rights of participants in legal mortgage relations. Distinct chapters regulate the mortgage contract; registration and protection of integrity of the object of mortgage; execution of the mortgage right; protection of rights of debtors in transactions with consumers; supervision of this sector, etc.

Law on modification and completion of some legal acts (on protection of personal data). It regulates the appointment and dismissal of the administration of the National Centre for the Protection of Personal Data, establishes status and functioning of the centre.

Law on modification and completion of the law on publishing. It restricts the publishing of literature "that contests and libels the state and people, calls for aggression war, national, racial or religious hatred, discrimination, territorial separatism, public violence, and other manifestations attempting to constitutional regime." It establishes that lists of works proposed for editing and funded by the state budget shall be elaborated by the Ministry of Culture and Tourism at the request of subordinated state printing enterprises, shall be coordinated with the Ministry of Education and Youth, Academy of Sciences of Moldova and approved by the parliamentary commission for culture, science, education, youth, sport and media.

Note by ADEPT: Editors have not been consulted when the amendments to the law were drafted and they did not warm the modifications, fearing that works will be censured and the freedom of expression will be affected.

Law on modification and completion of some legal acts (competence of CCECC). Amendments limit the rights of the Centre for Combating Economic Crimes and Corruption (CCECC) to conduct fiscal controls, which will be further organised only under a criminal prosecution. Also, the CCECC jurisdiction is excluded by the forced quest for fiscal debts, this being now an exclusive competence of the State Fiscal Service.

Law on modification and completion of some legal acts (anti-terrorism fight). The amendments are needed to implement 12 universal instruments against terrorism, the pertinent resolutions of the United Nations Security Council, as well as to ratify the International Convention for the Suppression of Acts of Nuclear Terrorism and the Council of Europe Convention on the Prevention of Terrorism adopted in 2005. The document stipulates the transfer of functions relating to criminal prosecution of terrorism financing cases from the Interior Ministry to the Centre for Combating Economic Crimes and Corruption, and this step is expected to speed up the delivery of information and documents on suspicious terrorism financing transactions, to encourage the specialisation of criminal officers and to prevent the duplication of public authorities’ competences.

Law on ratification of the Protocol III Additional to the Geneva Conventions of 12 August 1949 Relating to the Adoption of the Additional Distinctive Emblem. The protocol provides for another distinctive emblem, the "red crystal" equal in status to the Red Cross and Red Crescent.

Draft law on modification and completion of Article 35 of the law on budgetary system and budgetary process. Amendments aim to empower local authorities concerned to execute judicial decisions. It says that "executory documents on incontestable disaffection of funds from budgets of administrative-territorial units shall be presented by the executory body to local executive authorities in order to be executed, while those related to incontestable disaffection of funds of institutions financed from budgets of administrative-territorial units shall be presented by the executory body to local executory authorities, which together with coordinated public institutions shall present invoices concerning payment of the amount adjudicated accordingly to the documents from own funds to territorial units of the State Treasury. The executory body will cash in the adjudicated amount from debtor should the executory document be not executed within six months after the voluntary execution proposal was submitted." The document was drafted because central and local public administration authorities do not submit invoices to pay the amount adjudicated under definitive judicial decisions and the executory body does not have other levers to constrain the debtor in order to execute definitive judicial decisions. The violation of these legal regulations by central and local public authorities is the subject of many applications submitted by creditors concerned to the ECHR (according to an analysis on reasons why the ECHR condemns Moldova, more than 40 percent of sentences are passed for non-execution of definitive judicial decisions or tardy execution).

Draft law concerning the Free International Airport Marculesti. Under the draft, the airport will ensure air carriages, aeronautic services, industrial production and external trade activity. Its status will be similar to a free economic zone.

Draft law on protection of animals. It defines and established sanctions for cruel conduct over animals.

Draft law on modification and completion of some legal acts. It aims to introduce contravention or criminal responsibility for illegal projection, manufacturing, holding and use of special technical means to secretly get information, violation of rules on import, export, projection, manufacturing or sale of such means. The Government will approve a classifier of special technical means used to secretly get information, regulation on import, export, projection, manufacturing and sale of such means. The draft will prohibit the illegal use of special technical means by individuals and legal entities (other bodies and institutions which are not in charge with operative investigations) to secretly get information.

1.2. Parliamentary control. Statements

Hearings. Motions

The PCRM faction has refused to hear the Government concerning the course of the three big economy liberalisation reforms: fiscal amnesty, capital amnesty and duty-free on reinvested income; hear the governor of the National Bank of Moldova regarding the exchange issue and repercussions of the artificial appreciation of national currency on people; hear the prosecutor-general in connection with statements delivered by Moldovan president at a sitting of the Supreme Security Council regarding the illegal dispossession of some shareholders of the commercial bank Moldova-Agroindbank.

Moldova-EU Action Plan

According to a report by the Ministry of Foreign Affairs and European Integration, progresses made in three years of implementation of the Action Plan "were better than expected, there are accomplishments in multiple areas, with Moldova achieving some of them for the first time, and these progresses have become examples of success to be taken over by EU in other regions, too." It noted among progresses a high level of political dialogue; enforcement of the visa facilitation and readmission agreements; opening of the Common Visa Application Centre in Chisinau; providing of the Autonomous Trade Preferences; Moldova’s access to community programmes on diverse areas such as education, science, transportation, justice, economy, finance, etc. The Government of Moldova is seeking negotiations aimed at getting access to the four EU freedoms: movements of people, goods, services and capital.

The Ministry of Agriculture and Food Industry (MAFI) has informed parliamentarians regarding the acquisition of agricultural production in 2008 and providing of humanitarian aid under the shape of wheat to S.A Franzeluta and Combinatului de Panificatie in Balti. According to the report, 1,490,000 tons (28 quintals per hectare on average) will be harvested on all fields covered by 1st-group grain and vegetable crops (533,200 hectares), while the overall autumn wheat crop will be approximately 1,200,000 tons. In order to prevent an eventual rise of bread prices, it was decided to provide 9,000 tons of food wheat to SA "Franzeluta" and 2,000 tons to the Balti-based Combinatul de Panificatie. More than 11,000 tons of food wheat was delivered from the state reserve to about 80 bakeries as a technical credit. The ministry did not answer adequately regarding allocation of humanitarian aid to some economic agents which should raise profit on their own.

The Interior Ministry has answered an interpellation on resolution of the problem regarding the matriculation of motor vehicles introduced and registered in the Transnistrian region. According to the ministerial report, the draft law on documentation of some categories of motor vehicles and the temporary regulation on clearance, matriculation and introduction of some categories of motor vehicles in the motor traffic in Moldova have been drafted and submitted to the Government, but the final decision rests with the Parliament, given the "sensibility of the problem".

Questions. Interpellations

Answering an interpellation by PCRM Deputy Irina Vlah, the Ministry of Local Public Administration (MLPA) has described as "illegal" the election of Deputy Serghei Cernev as Chairman of the People’s Assembly of Gagauzia, as 12 out of 18 lawmakers who voted him were incompatible to do this while running public offices (mayors, councillors of the executive committee of ATU Gagauzia). A MLPA representative fell short of saying if the election of a PCRM candidate to this office shortly before the election of Cernev is also illegal. Also, it was omitted that the Law 344/23.12.94 on special legal status of Gagauzia says in Article 9 that the office of "paid" member of the People’s Assembly of Gagauzia is incompatible with any other paid function in other local authorities, and lawmakers who voted Cernev do not run paid offices in the People’s Assembly.

The Prosecutor-General’s Office has reported that the investigation on Internet users who published cruel messages against representatives of authorities on certain online forums is going on. The Prosecutor’s Office is investigating the eventual membership of the youths concerned to a radical structure or their support by extremist groups which have plans to "zombie" their values. In another reply, the Prosecutor-General’s Office has confirmed that paintings promised by Vladimir Voronin to new Russian President Dmitri Medvedev are fake and they do not have any artistic value.

Christian Democratic Deputy Valentina Serpul has asked the electronic media watchdog CCA and the Prosecutor-General’s Office to study the situation signalled by a publication, which reported that wire television operators do not pay taxes and other fees stipulated by legislation.

PCRM Deputy Nicolai Gutul has asked the Prime minister to oblige the administration of the Bureau for Interethnic Relations to postpone the summation of results of contests held over days of Slavonic culture and writing.

PCRM Deputy Irina Vlah has asked the Ministry of Local Public Administration to check the compatibility of offices of members of the People’s Assembly of Gagauzia.

Democratic Party Deputy Valentina Stratan has asked the Interior Ministry to argue changes in the traffic regulation, which prohibit motor vehicles with dark windscreen or windows. According to the lawmaker, effective standards do not prohibit such motor vehicles and motorists are awarded victory if the police sanction them.

Our Moldova Alliance Deputy Gheorghe Susarenco has asked the Prosecutor-General and CCECC director to provide information about criminal charges filed against certain judges whom the Moldovan president has accused of involvement in criminal actions at a sitting of the Supreme Security Council, and to establish if the innocence presumption was not violated this way.

Deputy Ivan Banari has asked the Government to provide information about results of the export promotion strategy, which is inadequately implemented.

Deputy Vladimir Filat has asked the Ministry of Justice to report actions aimed at preventing the sentencing of Moldova by ECHR for restricting holders of multiple citizenships from running public offices.

National Liberal Deputy Vitalia Pavlicenco has asked the Ministry of Education and Youth to explain the "transformation of a summer camp for children in the district of Floresti into a camp for pioneers."

Statements

The faction representing the Our Moldova Alliance (OMA) has released a statement accusing the majority faction of abuses and wrongdoings, referring in particular the suppression of the draft motion "Stop Communist Genocide against Farmers" from the Parliament’s agenda. OMA considers that the head of the sitting acted illegally and the Parliament leadership breached the Regulation, which says that motions shall be publicly examined and establishes the procedure to be respected in this respect.

National Liberal Deputy Vitalia Pavlicenco has warned that Moldova is entering a state of instability, with protests by meat traders, elderly, and repressions against youths who tell their opinions online, etc., being a proof in this regard.

OMA Deputy Valeriu Cosarciuc said that farmers whom opposition parliamentarians have recently introduced in the Parliament to attend talks on OMA initiatives aimed to improve the situation in agriculture are persecuted by law enforcement bodies; they are controlled, summoned by law bodies under various pretexts, etc.

Government

2.1. Appointments. Dismissals

Ion Apostol was nominated Deputy Minister of environment and natural resources.

2.2. Decisions

Decision on remuneration of personnel of the public institution Encyclopaedia of Moldova.

The personnel of this institution will be remunerated like employees of public law organisations working in the area of science and innovation, but they will be paid a monthly rise worth 1.5 salaries per office for complexity and importance.

Decision on granting the single compensations to young families. Families whose members are younger than 30 years old and work in the budgetary sector will be paid single compensations to build housing (30,000–50,000 lei, depending on the number of children). According to preliminary estimates, about 4,700 young families may be eligible to state assistance within this programme and about 100 million lei is needed for 2008.

Decisions approving draft legal acts:

• Concerning prevention and combat of offences committed via information systems;
• Concerning modification and completion of the law on state social allocations for certain categories of citizens (rise of allocations for persons looking after invalids at home and 3^rd-degree invalids since the childhood).

Decisions approving plans, concepts, strategies:

• The concept of the Integrated Information System of the Border Guard Service;
• The action plan on consolidation of migration management and asylum systems in Moldova for 2008–2009;
• The action plan on modernisation and optimisation of physical protection of facilities of vital importance and those running a high risk against eventual terrorist attacks for 2008–2010.

2.3. Sittings. Decisions. Statements

Meeting with members of the Association of Banks

Prime Minister Zinaida Greceanii has met members of the Association of Moldovan Banks and examined the honouring of the Strategy on development of the financial-banking sector until 2010, actions agreed at the last meeting in this format in March and current evolutions on the financial market. The meeting was part of consultations with the business community. Chairperson of the Association of Banks has reported the implementation of 10 points agreed at the last meeting with the Coordinating Council for the monitoring of financial market headed by Prime minister and raised new initiatives by bank community, in particular, the introduction of a form of strict record documents; strengthening of security of exchanges and modification of the Law on the prevention and combating of money laundering. It was decided to update the Action plan on implementation of the strategy on the development of financial-banking sector and inclusion of the National Commission of Financial Market into the Coordinating Council for the monitoring of financial market.

Report on implementation of the strategy on sustaining the development of internal trade for 2007–2009. The Ministry of Economy and Trade said that the organised trade covered 60 percent and unorganised trade 40 percent of the internal trade in 2007, the structure of trading of food products and manufacturing goods has changed, with the quality of retailing improving. The distribution of trade on regions did not change much compared with 2005. In particular, 60 percent of the retailing was concentrated in the Chisinau municipality, 8 percent in Balti, 11.4% in northern districts, 14.4 percent in the centre of the country, 6 percent in the south and about 3 percent in the administrative-territorial unit Gagauzia. The prime minister described the first year of implementation of the strategy as successful, assuring that most of planned actions have been achieved. At the same time, the prime minister noted that problems relating to entrepreneur’s patents and speculations around the modification of the regime of patent-based activities and those linked to prices of some products prove that the Government shall intensify its efforts in this regard. Mrs. Greceanii promised that the Government will shortly focus on removing risks related to cartel agreements, ensuring competitiveness, particularly in the area of prices and quality.

Sitting of the international reporting commission

A sitting of the commission for the elaboration of reports on honouring of international conventions has studied the situation regarding elaboration of periodical reports at national level and fulfilment of recommendations by specialised U.N. Committee to optimise mechanism of implementation of international conventions by Moldova. The national commission has approved the 2^nd Periodical Report on implementation of the U.N. International Covenant on Economic, Social and Cultural Rights; the action plan on fulfilment of recommendations by the specialised U.N. Committee on the 2^nd Periodical Report (amalgamated with the third one) by Moldova concerning the U.N. International Convention on the Elimination of All Forms of Discrimination against Women. It heard a report by the Bureau of Interethnic Relations regarding results of the support at the 72^nd session of the specialised U.N. Committee of Moldova’s periodical report on implementation of the International Convention on the Elimination of All Forms of Discrimination against Women.

Harvesting campaign

Premier Zinaida Greceanii has discussed with district chairmen actions needed to highly harvest 1st-group grains and other aspects of cooperation between central and local public authorities. The Prime minister stressed the importance of consolidating all decision makers by maintaining a constructive dialogue and noted the opportunity of establishing clear action priorities inclusively for the implementation of infrastructure investment projects.

Sitting of the Emergency Commission

The Prime minister has raised concern with the big number of fires this year, which killed 107 persons. According to Mrs. Greceanii, central public authorities have to intensify cooperation with territorial emergency commissions in order to prevent fires during grain harvesting campaign. At the same time, the civil protection and emergency service and the Ministry of Local Public Administration have been forewarned and instructed to work out an action plan within ten days aimed to optimise cooperation against emergency situations.

Presidency

3.1. Decrees

The Honour Order medal was awarded to:

• Sergei Pirojkov, Ukrainian Ambassador to Moldova;
• Oleg Babenco, Rector of the Slavonic University;

The Civic Merit medal was awarded to the following functionaries of the Ministry of Foreign Affairs and European Integration:

• Tatiana Botorovschi, Head of the directorate for economic relations with the European Union of the European Integration department;
• Dumitru Tira, Head of the directorate for regional development of the European Integration department.

The Labour Glory medal was awarded to Alexandr Bilinchis, Chairman of the Jewish Congress in Moldova.

Under a presidential decree, Natalia Catrinescu, Head of Division for Coordinating Policies and External Assistance within the Government Office, was nominated secretary of the National Commission for European Integration.

The Moldovan president has issued a decree instituting the medal For Excellency. According to the regulation, the medal will be annually awarded to graduates from accredited higher education institutions that graduate with a minimum general mark of 9 points. The medal was already awarded to 26 students from higher education institutions.

3.2. Sittings. Decisions. Statements

Plans for light aviation

Vladimir Voronin has chaired a working meeting on development prospects of the light aviation, indicating the opportunity of working out a special plan to stipulate concrete actions aimed at extending capacities of this sector. President stressed the utility of the light aviation for the border guard service, emergency service, sanitary aviation, etc. Mr. Voronin underlined the necessity to develop more quickly the ground infrastructure, including take-off and landing fields for light aircraft, indicating its important role in ensuring a modern infrastructure for business, state administration, sport and leisure.

Discontentment with gambling sector

The president of Moldova has convoked a sitting with the participation of governmental officials and discussed the situation in the gambling sector. He noted that the gambling sector has unsatisfactorily developed until now: gambling halls and grounds appear chaotically; processes in these enterprises are not qualitatively organised and they do not become infrastructure development centres; the gambling business does not have any connection with the tourism in Moldova. Voronin proposed to establish a working group to analyse the legal framework regulating the gambling and work out a programme on optimisation of the authorisation process, organisation and conduct of gambling in Moldova on the basis of advanced experience of the gambling industry from developed countries.

Concerns with keeping commercial and bank secret

According to a formal presidential communication, on June 16, 2008, at sitting of the Supreme Security Council were examined cases of falsification and abuses committed by a group made of lawyers, decision makers of the National Bank of Moldova and judicial system, which contributed to the dispossession of B.C. Moldova Agroindbank shareholders of securities worth 8 million lei by using fraudulent schemes. According to available communications, contracts of debts between some B.C. Moldova Agroindbank shareholders and persons recruited for this purpose have been fabricated, with law courts being further appealed to dispossess legitimate shareholders of the bank. All litigations have been examined by the Riscani district court in the capital and former shareholders were not notified over claims for the rights to their securities. The Moldovan president noted that the fraudulent scheme used to dispossess shareholders proves alarming conditions capable to initiate such litigations over other commercial banks as well, and to promote similar actions on financial market of the country. The Supreme Security Council has instructed the Prosecutor-General’s Office, the National Bank to establish a working group in order to synthetise and survey the legislation on banking and commercial secret and work out initiatives aimed to improve the national legislation in this area. The Supreme Court of Justice will analyse and generalise the legal practice regarding examination of litigations on property rights, the National Bank of Moldova will harden and optimise selection and promotion policies, while the Centre for Combating Economic Crimes and Corruption will speed up criminal prosecution on these cases.

Note by ADEPT: Statements delivered at the sitting of the Supreme Security Council affect the innocence presumption principle and, therefore, members of the Parliament have appealed to the Prosecutor-General’s Office and demanded information on criminal charges against judges concerned.

Combating trafficking in human beings

At a sitting on June 30, 2008 members of the Supreme Security Council considered the activity of the Centre for Combating Trafficking in Persons (CCTP) of the Interior Ministry and described it as unsatisfactory. Available data reveal shortcomings of the work of CCTP, CCTP involvement and protection of criminal networks which transport Moldovan nationals to other countries for labour purpose. CCTP officers have allegedly granted diverse "services" to traffickers in persons by being bribed, in particular, they did not file or quashed criminal cases, covered evidence, etc. The chief of state ordered a 50-percent reduction of the number of CSTP staff, the attestation of officers who will keep their jobs and the operative adoption of a complex of measures to bring concrete results of the fight against trafficking in persons.

Note by ADEPT: The president reacted shortly after the U.S. Department of State has released the Report on Trafficking in Persons, which indicates Moldova as a source country of trafficked persons; efforts by authorities to combat the trafficking in persons are inefficient; allocated budgetary funds are small; central authorities are indulgent, relying more on activity of nongovernmental and international organisations without assuming the lead of the anti-trafficking fight, etc. The U.S report noted that the specialised centre of the Interior Ministry has diminished the number of investigated cases inclusively under instructions by high-ranking state functionaries.

Concerns with developing grain enterprises

The chief of state was on a working visit to Combinatul de Produse Cerealiere in Chisinau and collected facts about activity of this enterprise and preparations for the new production season. Voronin noted that decisions made at a sitting on protection of state patrimony within enterprises of strategic importance hosted by presidency eight months ago have been implemented. Also, it was stressed the need to urgently resolve problems related to the unused patrimony, payment of old debts and modernisation of production process. A special governmental commission will work out an action plan on modernisation and permanent and dynamic development of Combinatul de Produse Cerealiere Chisinau.

Meeting with Eduard Musuc

A meeting with the newly-elected Chairman of the Chisinau Municipal Council took place at the initiative of the chief of state and focussed on latest developments in the Municipal Council and possibilities to optimise its work. The sides also discussed current issues related to functioning of communal administration, primordial problems in the capital which require joint actions by central authorities and Municipal Council.

Sitting of the National Commission for European Integration

The Prime minister has provided information about implementation of the priority plan on European integration for 2008 and Minister of Foreign Affairs and European Integration reported latest developments in Moldova-EU relations. The chief of state made public the project on Moldova’s position relating to the new agreement with the EU, which stresses five priorities for Moldova: to get a deep free trade regime with the European Union; to get a free visa regime with the European Union; the perspective to join the EU; the name of the new agreement and the term to begin negotiations in this respect with the EU. Also, institutional changes relating to competence have been agreed: the Government Apparatus will be in charge with implementing European reforms concerning the European integration and the Ministry of Foreign Affairs and European Integration will coordinate the foreign policy of Moldova with the EU, negotiate a new agreement with the EU. Under a previous decision, the National Commission for European Integration will held sittings at least once a month and the public and journalists will be welcome.

Economic Policies

1. Inflation and prices

Inflation reaching the "Code Red" limit…

According to an inflation rating by the international financial evaluation agency Fitch IBCA, Moldova is ranked the 14^th place among countries with most vulnerable emerging economies to inflationary shocks, but it has a lower risk than other European states such as Latvia, Lithuania, Romania, Ukraine, Bulgaria. Jamaica ranks the 1^st place in the rating of most vulnerable emerging states, being followed by Ukraine, Kazakhstan and Bulgaria, according to a Fitch report on evolution of emerging economies. However, Moldova is more vulnerable to emerging shocks than Estonia, Georgia, Hungary, Poland. The rating covered 73 countries.

The annual inflation rate in Moldova was about 17 percent in May. This is the highest inflation after December 2000 when the annual rate was 18.4 percent. Economists anticipate that the annual inflation rate in July will exceed 18 percent, as natural gas and electricity tariffs could be increased then. On the other hand, as a rule, a deflation is registered on summer, especially on food products. However, the present regional and international expansion of food prices will not reduce internal prices. The inflation after five months is 7.4 percent, with the Government and National Bank updating their target for 2008 from 10 up to 11.8–12 percent.

Fitch raised in June 2007 the forecast of the perspective of long-term international and national ratings of Moldova from "stable" to "positive". The Issuer Default Ratings ("IDR") of Moldova was rated "B-" and "B". The agency confirmed the short-term foreign currency rating "B" and the Country Ceiling "B-". Fitch Raiting confirmed the final asset reimbursement rating (RR4) on eurobonds.

2. Real sector

Economy trying to recover…

According to official statistics, the economic growth in the 1st trimester of 2008 was 4.3 percent, compared with 7.3 percent in the similar period of last year, but it will be hard to reach the 6-percent governmental target should trends be similar to the first quarter. The Gross Domestic Product in January-March 2008 exceeded 11.2 billion lei in comparable prices. According to NBS accounts, the production volume has increased by 6.2 percent in the first three months, intermediary consumption by 6.9 percent and net taxes on products and imports have grown by about one percent. Experts say that the rise pace of final consumption by households has decreased down to 5.5 percent. The gross capital formation advanced by 23.4 percent.

The Government forecasts a 6-percent GDP growth for this year, after the economic growth was 3.3 percent in 2007, compared with 4.8 percent in 2006. Starting 2000, the Moldovan economy has entered an increasing trend, reaching the highest growth of 7.5 percent in 2005, but the rise pace has further declined due to external shocks and drought. IMF forecasts a 6–7 percent growth in 2008, but a higher rise will be achieved should Moldova have a rich crop and resume production paces on account of wine exports.

3. Banking sector

The system slowing down in spite of high interests on deposits…

Overall assets of the domestic banking system were estimated at more than 35.4 billion lei (over 3.6 billion dollars) in January-May 2008 or the equivalent to over 60 percent of the 2008 GDP, growing by about 10.8 percent, compared with 16.4 percent in the similar period of 2007. According to NBM accounts, the ready cash by commercial banks has decreased by about 1.9 percent this year, down to 1.65 billion lei (while it rose by 23.8 percent in 2007), in particular due to the rise of the basic rate of mandatory reserves for attracted means (from 16 up to 22 percent), so that commercial banks had to reduce the cash. According to NBM estimates, overall assets in foreign currency recalculated in lei amounted to 19.3 billion lei and increased by more than 13 percent. The share of foreign currency in assets of banks was 72.5 percent (+0.62 percentage points).

Although interests on deposits have increased much, the portfolio of deposits by individuals has increased by 16.2 percent only (compared with 18.2 percent in 2007). The portfolio of individuals has increased by 1.6 billion lei in January-May 2007 and 2.2 billion lei in 2008. However, the sufficiency of banks’ capital has declined this year (-0.62 percentage points), but it is high so far, 28.7 percent, compared with the minimum norm of 12 percent.

At the same time, statistics reveal that individuals and legal entities deposited by 474.2 million lei more in May than in April due to the rise of the interest rate on deposits. Deposits by individuals have advanced by 12.7 percent and deposits by legal entities by 33.6 percent. Deposits in the banking system accounted for about 23.17 billion lei in late May and they increased by 497.6 million lei (2.2%), compared with the precedent month, after deposits in national currency have grown by 367.3 million lei (2.8 percent) and deposits in foreign currency by 130.3 million lei (1.4 percent). About 52 percent of deposits have a maturing term from 3 to 6 months.

4. Labour market

Dynamic of medium salary in January-May 2008…

The medium monthly wage in national economy accounted for 2,370 lei (237 dollars) in January-May 2008 and increased by 27 percent, compared with the similar period of the precedent year (the real salary rose by 10 percent). The medium salary in the budgetary sector amounted to 1,862 lei while the average wage in the real sector of economy accounted for 2,639 lei. The average salary in May 2008 was 2,537 lei, by 24 percent more than in May 2007. The medium salary in the budgetary sector accounted for 2,049 lei while in the real sector it amounted to 2,789 lei.

The net medium wage has grown in all economic areas. This evolution was due to the enforcement of governmental decisions on salary rises in 2008 for public functionaries, teachers and contractual personnel of sanitary-medical facilities. The net medium salary rose over the average on economy in industry, transportation and communications, finance, notably by 20–40 percent. The average salary in financial sector accounted for 5,328 lei in January-May 2008, constructions – 3,149 lei, real estate transactions 3,003 lei, industry 2,842 lei, public administration 2,597 lei, health and social assistance 2,075 lei. The medium monthly salary in agriculture and forestry accounted for 1,149 lei, fish breeding – 1,251 lei, education 1,632 lei in the period concerned.

Transdnistrian Problem

Do Ukraine and Russia compete for the control on Transnistria?

Some developments in the second half of June have made observers suppose that the race between Ukraine and Russia to control the Transnistrian regime has intensified. After Russia has refused to recognise Transnistria’s independence despite its promise to extend the "Kosovo precedent" Transnistrian leaders signalled the need to promote a "multi-vector" foreign policy which would replace the one addressing Russia only. The multi-vector foreign policy may consist in oscillations between Russia and Ukraine only, as the existence and the survival of the separatist regime have always depended on willingness of the two countries.

In this respect, it is curious that Ukraine has recently got what Russia could not earlier get, though Russia should be crowned with the laurel of efficient peacekeeper. Thus, the press service of the Ukrainian Foreign Ministry reported on June 18, 2008 that after a meeting with Ukrainian Foreign Minister Vladimir Ogrizko in Odessa on June 14, Transnistrian leader Igor Smirnov has accepted the following:

• The resumption of the "5+2" negotiations;
• The co-participation of Transnistria in the Moldovan-Ukrainian border delimitation commission. Earlier, Smirnov had categorically opposed this, saying that Moldova’s participation in delimiting the Transnistrian section of the Moldovan-Ukrainian border is not grounded;
• Talks on building the Dniester Euroregion, which would cover segments of the Ukrainian regions Odessa and Vinitsa on one side and Transnsitria on the other side.

In all likelihood, Russian authorities have decided to get involved in order to prevent the development of Tiraspol’s game with Kiev, given their "friendly" relations with Ukraine.

Litskai has made public the target of playing on contradictions between Chisinau and Kiev, while Chisinau is trying to get in the good graces of Moscow in the detriment of relations with Kiev.

The Deputy secretary of the Russian Security Council, Yuri Zubakov, met President Vladimir Voronin and Tiraspol leader Igor Smirnov in Chisinau and Tiraspol on June 18–20, 2008. Zubakov has told Smirnov in Tiraspol that a meeting with Russian President Dmitri Medvedev will be organised in the second half of the year, stressing that he has visited Transnistria to meet his instruction of discussing and answering acutest issues. According to Zubakov, these are: the harmonisation of Transnistrian legislation with Russian laws; the Russian humanitarian assistance to Transnistria and the resumption of the "5+2" negotiation process. Zubakov and Russian diplomats who accompanied him assured that Russia does not have plans to pressure the separatist regime and its position did not change – the parties must find a mutually accepted solution and negotiation is the only way to do this and this process shall be resumed. Russian diplomats insisted on two priorities: strengthening confidence-building measures and drafting a document on Transnistria’s status. In order to be more convincing, Russian diplomats recalled the economic aid provided to Transnistria. In particular, they interestingly remarked the Russian "direct subsidies" for the natural gas supplied to Transnistria, which raised debts in the amount of 1.6 billion dollars. Earlier, Russian authorities avoided discussing "direct subsidies" on gas supplies, while now they are directly promising to continue doing this in future but the consumption and distribution of resources shall be transparent."

Transnistrian authorities have appointed Deputy foreign minister Vladimir Yastrebchiak as ad-interim minister shortly after the visit by Russian diplomats led by Zubakov to Chisinau and Tiraspol. The news agency Novy Region quoted sources in the Ukrainian Foreign Ministry as saying that Smirnov will fire Litskai soon for the pro-Ukraine policy he has tried to promote in the last months. The eventual dismissal of Litskai is allegedly linked to his alcohol addiction which often turns into public debauches. In these circumstances, one shall see the real reasons why Litskai is disgraced for: promotion of the so-called "multi-vector" foreign policy with oscillations between Russia and Ukraine, serious drunkenness, health, etc. Indeed, all these factors are convergent.

During a June 24, 2008 meeting between the chairman of the OSCE Mission to Moldova, Philip Remler, and Transnistrian leader Igor Smirnov the sides discussed ways to optimise the activity of Moldovan-Transnistrian working groups and give an impulse to efforts to restart negotiations. In this respect, Smirnov has accepted to meet President Vladimir Voronin again in the second half of July 2008 in the presence of representatives of participants in the "5+2" negotiations. However, Smirnov emphasised that working groups do not progress; Transnistria will accept only an equal-footing dialogue and guarantees that previous agreements between Chisinau and Tiraspol will be honoured. Also, Smirnov avoided confirming reports by the press service of the Ukrainian Foreign Ministry regarding results of the meeting with Minister Vladimir Ogrizko in Odessa. He noted that Transnsitria is interested to resolve economic and transportation problems, particularly the resumption of the railway traffic, which will be discussed in the "5+2" format.

Foreign Affairs

European Integration

The 6^th meeting of the Republic Moldova – European Union Cooperation Subcommittee

Brussels hosted on June 25–27, 2008 the 6^th meeting of the Republic of Moldova – European Union Cooperation Subcommittee on Energy, Environment, Transport, Telecommunication, Science, Technology, Culture and Education. The parties have discussed progresses made by the Republic of Moldova and prospects of Moldova-community cooperation in areas covered by competence of the subcommittee. In particular, representatives of the European Commission (EC) appreciated developments in the area of electronic services. They also welcomed environmental evolutions, but EC experts recommended Moldova to prioritise the national calendar on approximation of the legislation on environment and keep involving civil society and private sector in drafting and implementing environmental policies.

The meeting also focussed on implementation of the Energy Strategy of Moldova until 2020 and Moldova’s application to join the Energy Community Treaty. The Moldovan side has sought the EC support to find funds for the implementation of the Energy Strategy. In its turn, the European Commission said that it has plans to adopt a mandate in order to begin accession negotiations by the end of July 2008. Another topic of the meeting was Moldova’s demand to be included in the European Common Aviation Area and EC talks on establishing a South East Europe Transport Community.

At the same time, the EC reconfirmed its readiness to provide the necessary support to Moldova in order to fulfil objectives of Moldova-community cooperation in all sectors discussed at the meeting.

Black Sea Synergy (BSS)

On June 20, 2008 the European Commission presented the report on the first year of implementation of the Black Sea Synergy released in April 2007. The report concludes that initial results of the Black Sea Synergy demonstrate the practical utility and potential of the EU initiative. However, the Black Sea Synergy progress requires a more active and consistent participation of EU member states and Black Sea partners^[1].

Also, the report establishes new action initiatives for next year, among them: mobilisation of efforts of BSS members by establishing long-term measurable objectives in the area of environment, energy, maritime transport and security, establishing sectoral partnerships to encourage the co-financing of regional projects, stirring up the participation of civil society in BSS projects, etc.

Bilateral cooperation

Republic of Moldova – Russia

Prime Minister Zinaida Grecianii was on a formal visit to Moscow on June 20, 2008 and met there Russian Premier Vladimir Putin, Aleksey Miller, Chairman of the Gazprom Board of Directors, Minister of Education and Science, Andrei Fursenko, Co-chairman of the Moldovan-Russian commission for commercial-economic cooperation, and Russia’s Deputy Foreign Minister Grigori Karasin.

The talks focused on actions to impel the commercial-economic cooperation (in particular, extending Moldovan wine and agricultural exports to Russia and attracting Russian investments on Moldovan market), debt for Russian gas^[2] and gas price, situation of Moldovan migrants in Russia and settlement of the Transnistrian conflict.

As regards the energy issue, it was decided after talks with Aleksei Miller that future gas supplies will be 3 billion cubic metres, but they will be delivered for a 240-dollar price per 1,000 cubic metres (starting July 1, 2008), compared with the old price of 210 dollars per 1,000 cubic metres. In addition, Gazprom has plans to invest about 30 million dollars in building gas pipe lines in Moldova. In her turn, Grecianii invited Russia to transit its exports (of energy and other goods) via Moldova.

As regards the Transnistrian issue, the sides have reconfirmed the necessity to settle the conflict by respecting the sovereignty and territorial integrity of Moldova. According to Russian press reports, Zinaida Grecianii has transmitted a series of initiatives on settlement of the Transnistrian conflict to Vladimir Putin on behalf of Moldova’s president. Putin assured that the conflict may be settled in future should Transnistria and Moldova wish it.

Grecianii’s visit to Moscow came the next day after Moldovan President Vladimir Voronin has met Yuri Zubakov, Deputy secretary of the Russian Supreme Security Council and discussed latest developments in the Transnistrian settlement process and perspectives to resume the "5+2" negotiations.

Multilateral cooperation

Republic of Moldova – Council of Europe

ECHR decisions

On June 17, 2008 the European Court of Human Rights sentenced Moldova in the case Victor Savitchi vs. Moldova for torture and ill-treatment. The Court granted 6,000 Euros in non-pecuniary damages and 2,000 Euros in costs and expenses.

² Moldova’s debt for Russian gas amounted to 1,046,500,000 lei in early 2008, without penalties. In particular, Moldova’s debt amounted to 160.6 million dollars without penalties and the debt of the Transnistrian region accounted for 885.9 million dollars.

Studies, Analyses, Comments

Republic of Moldova shall join EU one day, somehow…
Igor Botan, 30 June 2008

President Vladimir Voronin chaired a sitting of the National Commission for European integration on July 25, 2008. In all likelihood, the sitting was set over the expiration of the November 28, 1994 Partnership and Cooperation Agreement (PCA) between European Communities and their member states, on one hand, and the Republic of Moldova, on the other hand

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