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Activity of Public Institutions

Government
Presidency

Terms to schedule elections by Igor Botan
Romania is becoming main destination for Moldovan exports. Is there any connection with growth of lohn supplies? by Adrian Lupusor

Activity of Public Institutions

Government

1.1. Appointments. Dismissals

• Veaceslav Dobinda, Head of Department in MFAEI, was proposed as Moldovan ambassador to Estonia.
• Constantin Mosleancov was appointed administrator of the Tvardita-based Free Enterprise Zone.
• Anatol Turcanu was appointed Deputy Minister of Construction and Territorial Development.
• Valeriu Hincu, officer of the Security and Information Service, was appointed director of the Interior Ministry’s Centre for Combating Trafficking in Persons (the appointment is coordinated with the U.S. Embassy).

Under governmental decisions, the following officials were relieved from their offices upon their "demands":

• Vladimir Verdes, director-general of the Drug Agency;
• Ion Sturzu, Deputy Minister of Finance;
• Sergiu Rata, Deputy Minister of Health;
• Petru Plop, Director of the Interior Ministry’s Centre for t for Combating Trafficking in Persons.

2.2. Decisions

Decision approving the methodology for assessing the corruption risks within public institutions. The document sets up a mechanism to assess existing and possible risks, establishing ways to report and reduce them by the employees of public institutions independently or jointly with other competent bodies.

Decision increasing nominative compensations for certain categories of people. Starting August 2008, nominative compensations will be increased by about 30 percent for natural gas and by approximately 13 percent for electricity. Compensations will be increased over the rise of natural gas and electricity tariffs for final consumers on August 1. About 155,000 persons will be paid natural gas compensations and another 230,000 people will receive compensations for electricity. More than 7 million lei will be allocated from the state budget for the next four months to cover the rises.

Decision on building the Cainari Industrial Park. The park will cover about 24 hectares, with the governmental social capital accounting for 10,000 lei. The term is estimated at 15 years and it may be extended.

Decision on awarding prizes to Moldovan performers attending the Beijing Olympics. According to governmental decision, winners of golden medals will be awarded a 70,000-euro price, silver winners will get 50,000 Euros and bronze winners 30,000 Euros. Athletes who will rank the 4^th-8^th places will be awarded between 1,000 and 15,000 Euros and similar prizes will be also awarded to trainers of winners and their doctors (20 percent of the value of prize which will be awarded to the assisted athlete).

Decision extending the term of free of charge documentation of Transnistrian residents. The Government has extended with six months up to December 31, 2008 the term for the confirmation of citizenship and documentation of people from the left bank of the Dniester River. About 60 percent of residents of the Transnistrian region have been issued identity cards of Moldova until now.

Decision approving the Regulation on remuneration of workers of some state enterprises, organisations and institutions. There are 18 state enterprises which pay excessively differentiated rises, supplements and prizes by breaching and neglecting the legislation in effect. Very large funds are wasted for payments unrelated to work (prizes, rises, aid, rewards). Thus, the medium salary in some state enterprises exceeds 3–4-fold the medium wage on country (the medium salary of an AGEPI employee is 8,199 lei, while the state enterprise Registrul Cinematografic pays an average salary worth 1,967 lei. The document aims to unify sizes and conditions to grant rises, supplements and prizes to salaries.

Decision approving the draft law on introduction of a safeguard tax. It introduces an additional 20-percent tax on import of sweets, chocolate and other foodstuffs containing cacao. The National Association of Producers has sought these measures to sustain the domestic sweet and bakery industries which are losing their marketplace because of imported products.

Decision liquidating the joint stock society Stadionul Republican. The initiative promoted by the Sport Agency is motivated by the fact that this institution is not functioning, as the stadium was demolished. The Ministry of Justice has signalled that the draft document does not stipulate the procedure of liquidation and dismissal of workers.

1.3. Sittings. Decisions. Statements

Big energy price rise

Under a decision by the National Agency for Energy Regulation (NAER), the medium natural gas tariff for final consumers will grow by about 27 percent on average starting August 1, from 2,775 up to 3,523 lei per 1,000 cubic metres. Electricity tariffs for final consumers will grow by about 20 percent. At the same time, natural gas tariffs for householders consuming up to 30 cubic metres a month will be 3,414 lei (2,666 lei formerly), while tariffs for those consuming more than 30 cubic metres of gas have grown from 3,161 up to 3,813 lei per 1,000 cubic metres.

Note by ADEPT: Thus, as the gas price has grown by 37 dollars only, the rise for some final consumers will be about 45 Euros and the price they pay per 1,000 cubic metre of gas will exceed 254 Euros (the gas is bought in exchange for 253 dollars only). The rise has a political nature, with authorities assuring themselves that they will not have to increase prices on winter, when the consumption is bigger and consumers will not be "additionally troubled" before parliamentary elections. New tariffs will also increase the pressing of heating supplied to consumers and will bring a series of other successive rises.

Additional actions to secure motor traffic

The traffic in 2007 and first half of 2008 was very dangerous and the Interior Ministry cannot ensure an essential improvement: 464 persons were killed and 2,984 were hurt in 2,437 traffic accidents in 2007 and 161 people were killed and another 1,290 were hurt in 1,068 accidents in the first half of 2008. In order to redress the situation, the Government has decided to reintroduce the compulsory subject Traffic Security in secondary schools for all forms starting September 1. Also, it ordered the installation of automatic traffic supervision systems in streets of Chisinau municipality; endowment of subdivisions to test motor vehicles with new adequate means for the control of technical condition and with control means to test the alcohol concentration in the air expired by motorists; the State Transportation Administration will work out the national standard for technical condition of motor vehicles and their equipment, mechanism of implementation of the Euro-2 standard for second-hand imported motor vehicles; a special attention will be granted to driving institutions; norms on psycho-physiological and health condition of motorists and candidates will be revised. The Interior Ministry has promoted a draft law and submitted it to the Parliament, which stipulates to triple fines for drunken motorists.

Progress in elaborating the Compact Programme

The committee monitoring the process of elaboration of the Compact Programme chaired by prime minister has studied the stage of evaluation of the country proposal for Compact assistance by the U.S. Millennium Challenge Account (MCA). Within the Compact Programme the MCA will deeply study projects on reconstruction of road segments and transition to a modern agriculture. The assistance within the Compact Programme will be approved in dependence of several factors, including success in implementing the Preliminary Country Programme, and those in charge with this plan say that more than three fourths of the planned actions have been accomplished on time, with about 200 million lei being spent for this purpose.

Concerns with juvenile crime

Prime minister was discontent with actions aimed at combating the juvenile crime, at a joint meeting of collegial councils of the Interior Ministry, Ministry of Local Public Administration, Ministry of Social Protection, Family and Child, Ministry of Justice, Ministry of Education and Youth, Ministry of Health, and Prosecutor-General’s Office. According to available data, 30,000 minors are annually educated against crime, about 99,000 children are not supervised by their parents who are abroad, and the police are supervising more than 4,300 minor offenders. The premier was indignant over attitude of central public administration regarding juvenile problems and lack of cooperation within these authorities. Mrs. Greceanii recommended competent authorities to work out an action plan against juvenile crime within a week and to deliver it to district councils for execution, instructing heads of districts to organise meetings with officials in charge with education and integration of children into society.

Concerns with combating trafficking in human beings

A report on prevention of trafficking in human beings in Moldova for 2007–2008 was presented at a meeting of the National Committee for Combating Trafficking in Human Beings chaired by Deputy Prime Minister Victor Stepaniuc. The deputy premier said that the ranking of Moldova on the 3^rd place among countries with grave problems in this area by the U.S. Department of State is a signal that the fight against trafficking in persons is imperfect. Stepaniuc condemned the complicity of functionaries in trafficking in persons and promised that decisive actions will be taken against all officials concerned. In order to redress the situation, the Government and competent institutions are implementing special plans and actions, and many other actions are planned till the end of this year.

Prime Minister Zinaida Greceanii has also tackled the human trafficking issue at a meeting with coordinators of the U.S. Department of State for Moldova. She stated that the Moldovan Government is concerned with trafficking in human beings and it does its best to reduce this scourge. Representatives of the Department of State have appreciated the efforts made by Moldovan Government in 60 days granted after the report concerned was released, in order to remedy shortcomings in the fight against trafficking in human beings, and assured that they back the idea to consolidate the communication between structures in charge with this area.

Elaboration of the national security strategy

The commission chaired by Prime Minister Zinaida Greceanii has discussed the concept of the future document at a first sitting. The national security strategy will be a ground for the elaboration of the national military strategy, strategy on public information regarding national security matters and other sectoral strategies on national security. The prime minister invited the civil society to participate in the elaboration process and demanded the establishing of a technical group to work out the draft by August 20, 2008. The document will be accompanied by an action plan on implementation.

Problematic selection of members of the National Council for Participation

The Government has extended the term for the selection of members of the National Council for Participation, which will be made of representatives of civil society, business environment, development partners, in order to consult them in the process of elaboration, implementation, monitoring, evaluation and updating of strategic planning documents.

Management of flood crisis

• The prime minister convoked the national emergency commission on July 26, 2008 and decided to nominate Deputy Prime Minister Igor Dodon in charge with the organisation, protection and security of population. The population was warned over possible floods, with the commission deciding to evacuate the leisure area in the town of Vadul-lui-Voda. The prime minister noted that Moldovan authorities have already taken necessary actions and the situation is under control due to efficient cooperation with Ukrainian Government, and Moldovan authorities are able to get ready for emergency situations in meadows of the Dniester and Prut Rivers, as well as to prevent people from areas concerned;
• Deputy Premier Igor Dodon told a newss conference on July 27, 2008 that central and local public authorities have taken all necessary actions to protect people from risky zones who have been affected or could be affected by floods (all children, personnel and persons resting in summer camps and spas from the leisure area in Vadul lui Voda have been evacuated; Dniester and Proute areas which were affected or could be affected by floods have been evacuated);
• The prime minister chaired a meeting of the emergency commission on July 28, 2008 which considered the state of things and reported the evacuation of persons. Taking part in the sitting was chairman of the Chisinau Municipal Council Eduard Musuc, although the mayor-general of the capital who also heads the municipal emergency commission is in charge with emergency situations. Prime Minister Zinaida Greceanii ordered the establishing of a special commission to evaluate the cost of flooded homes and farm land;
• Moldova and Romania decided on July 29, 2008 to increase the spill-over from the accumulation lake Costesti; residents from 27 localities are being evacuated. A special commission headed by the deputy minister of construction and territorial development will assess necessities and costs to build new homes for victims of natural disasters and this commission will join the national commission to evaluate consequences of floods;
• On July 30, 2008, the Ministry of Finance opened a special account to collect funds from donations in order to assist victims of natural disasters.
• The prime minister invited members of the cabinet of ministers, public authorities of all levels, citizens and economic agents at the beginning of an ordinary sitting of the executive to be responsible and abnegated in actions to protect citizens affected by recent massive floods. Foreign partners were invited to consider possibilities of providing emergency assistance to attenuate consequences of floods and assist victims of natural disasters.

  Note by ADEPT: The media noted that on the day when the appeal was launched several draft decisions stipulating the allocation of more than 5.7 million lei to renovate a new headquarter of the audiovisual media watchdog CCA, as well as a decision withdrawing a building evaluated at about 11 million lei from SA Circul in Chisinau and its transmission to the Ministry of Culture and Tourism and delivery of state shares worth the value of the building concerned to this society by the Agency of Public Property, were part of the agenda of the governmental sitting.

• The commission for the evaluation of consequences of floods held the first sitting on July 31, 2008 and outlined tasks for every participating central public authority, in particular, the Ministry of Public Administration was instructed to place persons evacuated from flooded localities or those running the risk to be flooded; the Ministry of Agriculture and Food Industry will evaluate the flooded farm land; the Ministry of Finance and Agency of Material Reserves, Public Acquisitions and Material Assistance will daily report financial and humanitarian aid donated to victims of floods; the Interior Ministry will assist people to evacuate water from their cellars and homes; the Ministry of Construction and Territorial Development is in charge with ensuring the housing of victims of floods and started evacuating houses which shall be reconstructed and renovated. As of July 31, 2008, authorities have evacuated 4,939 persons and reported 466 flooded houses and 374 villas;
• It was reported at a meeting of the Commission for abolition of flood consequences of floods on August 1 that residents of flooded localities are being vaccinated; 600 dead cattle and 2,500 fowl (mainly brought by water from neighbouring countries Ukraine and Romania) have been evacuated; disinfectants have been procured and disseminated to disinfect wells and hotbeds of catching diseases in flooded localities.

Presidency

2.1. Decrees

Under a presidential decree, Angela Colatchi was appointed Deputy Director of the Academy of Public Administration advising the president of Moldova.

The Labour Glory Order was awarded to Vasile Vrancean, deputy rector of the State Agrarian University of Moldova, and the Civil Merit medal was awarded to Deputy Minister of Health

Boris Golovin and Chairman of Soroca district Mircea Martiniuc.

Vasile Ursu, incumbent Minister of Transport and Road Management, was awarded the honorific title Man of Honor.

Following recent amendments to legislation which empowered the chief of state to award honorific titles to artists, Vladimir Voronin awarded titles of Artist of People and Honoured Artist on July 19.

The chief of state has signed a decree awarding state medals to a group of participants in the construction of the railway Cahul-Giurgiulesti. He awarded the Order of Honour, the Labour Glory order, the Civic Merit medal.

3.2. Sittings. Decisions. Statements

Sitting of the National Commission for European Integration (NCEI)

On July 17 Moldova’s president chaired a NCEI sitting which heard a report by Minister of Foreign Affairs and European Integration concerning the July 7–8, 2008 informal consultations with the European Commission. Prime Minister Zinaida Greceanii reported the implementation of the priority plan and the chief of state told the timetable of Moldovan authorities within further dialogue with the European Union regarding the new agreement, stressing that Moldova’s goal is to speed up this process, so that the mandate for negotiations to be approved before parliamentary elections. The president was very discontent and criticised the dialogue between Moldovan authorities and the French EU Presidency. Voronin estimated that no special events are planned at this stage and the time will be used at maximum to do all "homework" accordingly to the priority plan. At the same time, the chief of state indicated special issues in the dialogue with European partners: freedom of the media, politicised dissemination of public funds. He instructed competent authorities to present written counterarguments under the shape of clear and concrete answers based on statistics. As "many assess the situation on the basis of rumours, believe old stereotypes, get informed from the opposition media only," Vladimir Voronin demanded "communications" on so-called sensitive problems (mass media, public broadcasting, electoral system, new law on dual citizenship; liberal economic and financial initiatives; anti-corruption actions; investment climate; privatisation plans). The information will be published on the website of the National Commission for European Integration. For the next sitting set for late September the MFAEI shall work out an in-depth plan of all activities, visits, conferences and other actions which will take place on the Moldova-EU dimensions in 2008.

Note by ADEPT: According to the latest issue of Euromonitor, which covered the evolution of reforms in March-June 2008, a progress was made in most of key areas, but there are also serious problems and even certain regresses in key areas, in particular, functioning of democratic institutions; freedom of opinion and expression; anti-corruption fight; redress of business climate, etc.

Supreme Security Council discusses demographic security

A sitting of the Supreme Security Council has heard governmental reports on birth rate, death rate, other demographic phenomena and factors encouraging them. It was noted that Moldova is facing a series of problems related to demographic security, in particular, decreasing birth and fertility rates; ageing of people; degradation of family; migration, etc. Authorities have taken actions to improve the demographic situation such as the rise of the single birth indemnity (1,200–1,500 lei); monthly child care indemnities; medical assistance to enhance the birth rate. The president of Moldova demanded the amalgamation of all aspects related to the demographic security and ways to remedy existing problems in this area into a single national document by November 1, 2008. The Supreme Security Council asked the Government to increase the number of family health and planning centres and to enhance their efficiency; to take adequate actions to prevent women from giving birth to their babies at home or in other inappropriate places; to empower maternities to register new-borns free of charge; to study modern experience of other countries in planning and strengthening demographic security; to modernise the statistical demographic system and consolidate the bilateral legal framework on migration. Vladimir Voronin has also reiterated the priority of modernising the regional infrastructure in order to keep youths in villages and pleaded against any attempts to cease the work of schools and kindergartens under the pretext of not using all capacities or other reasons.

News conference on July 23, 2008

In an introduction and answers given at a news conference on July 23 the president of Moldova tackled a series of issues linked to interior and foreign policy:

• Forecasts about investment boom, growth of foreign investments (the rise of investments in 2008 exceeded two-fold the indicators for 2005) are becoming true, and noted that the EU was unsatisfied with the business climate in Moldova because of "some misunderstanding" with UNION FENOSA Company" and "nothing else";
• Now enterprises are privatised after being freed of debts (through fiscal amnesty), the privatisation process is transparent, the state focuses on best financial offers while selling enterprises (241 million lei went to the budget in 2007–2008 after the privatisation of 73 enterprises);
• Indicators of execution of budget and budgetary policy are positive, the national budget was executed 118 percent and local budgets 115 percent;
• The medium salary has grown by 27 percent (10 percent in real terms), compared with the same period of 2007; the pension was increased by 21 percent (4.7 percent in real terms);
• Elections in Moldova have been held under conditions of a 6-percent electoral threshold in the last 10 years and this threshold aims to consolidate parties, particularly the opposition;
• The situation in Gagauzia will be remedied accordingly to legislation;
• The best and unprecedented conjuncture was created in the Transnistrian settlement process;
• Political relations between Moldova and Romania are at a positive stage due to recent constructive negotiations on basic and border treaties;
• Cooperation with certain opposition parties, especially with CDPP leader, will be possible after the 2009 parliamentary elections, too, etc.

Sitting on fight against trafficking in persons

A report on the fight against trafficking in human beings was presented at a presidential sitting, and it signals the following problems in this area:

• The lack of cogent statistics and professional analytical actions;
• The need to improve the mechanism of storage and evaluation of data on illegal migrants;
• Incomplete and unclear data provided by tourism agencies, which prove the eventual participation of some travel agencies in trafficking in persons;
• Insufficient protection of victims of trafficking in human beings, inefficient actions to repatriate this category of persons;
• Lack of efficient and constructive cooperation between local and international competent state bodies and nongovernmental organisations;
• Inefficient work of the Interior Ministry’s Centre for Combating Trafficking in Persons (CCTP), Border Guard Service.

Finally, the chief of state has demanded the setting up of a single automatic information system to record the circulation of citizens to other countries and their comeback; the elaboration of mechanisms to strictly monitor the illegal migration; the establishing of a working group to consider the opportunity to improve the national legislation; to speed up the reorganisation of the Interior Ministry’s CCTP; the Supreme Court of Justice and Superior Council of Magistracy will focus on a right qualification of offences related to trafficking in persons, fair penalties and legal activity of judges; the strict monitoring of travel agencies and presentation of monthly reports to the Supreme Security Council regarding prevention and combat of trafficking in human beings.

Building industrial parks

Vladimir Voronin has chaired a working sitting on process of building industrial parks in regions of the country. According to available information, actions are taken to open three industrial parks in cities of Cainari, Floresti and Ungheni as part of nine projects of industrial parks established by Government, and the feasibility study for the other six parks will be finished in 2 months. All projects on building industrial parks were based on four key criteria: available fields and necessary infrastructure or its immediate neighbourhood; readiness of local public administration to support these projects; interest of investors and available workforce in the region. The chief of state told the governmental administration that the 2009 budget shall fund actions to ensure the infrastructure for at least one industrial park, while another two will be built on the basis of public-private partnership. At the same time, Voronin noted that building industrial parks is the end of the process of creating framework conditions in Moldova to attract investments.

Agro-food security

The chief of state convoked a sitting on July 28, 2008 to discuss the world food crisis and actions to reduce its impact on Moldova. According to studies held by presidential administration, key problems faced by CIS member states and countries in the region are related to dear food products compared with living standards of people, costly fuels, natural gas and other wide-consumption goods, rather than to the deficit of foodstuffs. Given the risks for Moldova, the Government was instructed to work out a programme on ensuring the agro-food security of the country, which shall stipulate basic policies concerning crops needed by country; protection of farm land against hailstone and ensuring them with dripping irrigation systems; use of arable land; enhancing soil fertility and efficiency; use of agricultural fields accordingly to destination, etc.

Sitting on water supply and enlargement of irrigated fields

On July 17 2008, Vladimir Voronin convoked a working sitting on ensuring localities with water providing and sewerage services, enlargement of irrigated fields, implementation of the water providing and sewerage strategy. The chief of state insisted on approaching altogether the objectives of enlarging irrigable fields and providing people with quality drinkable water.

Note by ADEPT: The sitting did not tackle aspects related to ensuring the security of big water tanks, anti-flood protection and examination of existing problems in the area.

President’s involvement in managing flood crisis

The chief of state has convoked a sitting on remedying consequences of floods that hit the Republic of Moldova and thanked all participants in combating the disaster, remarking the responsibility and professionalism they prove in this complicated period. The president has recommended a programme of operative and future actions to get through the difficult situation faced by many flooded localities. The Government is due to make a decision on future actions, terms and executors, while a working group will be in charge with temporarily accommodating victims, permanently provide them with drinkable water, food, and other first-need products. The sitting also discussed the housing of people whose homes have been flooded. Flooded educational institutions shall be renovated before the new academic year. Apele Moldovei Agency jointly with planning institutions from Moldova will make an inventory of protection constructions on water basins and will revise norms and regulations on water evacuation.

At sitting held on August 1 with members of the government and representatives of business community, the president appreciated efforts made by authorities in charge with preventing and remedying consequences of floods, inviting businessmen to help shelter victims of floods before the cold season.

Economic Policies

1. Inflation and prices

Vegetables and fruits of farmers likely to calm down inflation growth …

Medium consumer prices decreased by 1.1 percent (deflation) in June compared with May 2008, in particular, prices of food products have dropped by 3.5 percent, while prices of manufactured goods have grown by 0.2 percent and tariffs for public services by 0.4 percent. In particular, prices of fresh vegetables have decreased by 26.4 percent, early potatoes by 30 percent, fresh fruits by more than 7 percent, eggs by 8.5 percent and dairy by 1.2 percent. Prices of household appliances and footwear have decreased in the structure of manufactured products. However, there were some high price rises on foodstuffs in the period concerned; in particular, the price of rice has increased by more than 30 percent, sugar by over 2 percent, vegetal oil by 1.1 percent. The inflation rate this year was 6.1 percent (July 2008 compared with December 2007), while the annual rate exceeded 15 percent.

The Government, National Bank of Moldova and many independent analysts anticipate a slower price rise after the seasonal decline of prices of food products. Many food products are cheaper on summer and this stimulates the reduction of the inflation growth pace. Food products cover about 40 percent of people’s consumption and any change of prices influences the rest of economy. NBS and NBM follow statistics while calculating a growth of food prices close to zero for summer. The supply of farms which flood markets in cities with vegetables, fruits and other food products on summer overturns the inflation rate for several months. This year, authorities expect the same phenomenon, which would reduce inflationist pressures related to expensive fuels, foodstuffs, etc. From statistical point of view, prices of foodstuffs decrease much in July and August. A deflation may be also recorded for this period. But consequences of floods will be reflected in the inflation rate for the next period for sure.

On the other hand, price cut pressures come from other sides, too. The more the leu is strengthening, the cheaper imports are. Meat and sugar prices could fall. Prices of milk and dairy, which cover more than 10 percent of people’s consumption, could decrease much this summer. One will see whether problems in agriculture will allow a long-term price stability or prices of foodstuffs will grow again more than in other areas. One will live and see…

At the same time, the National Agency for Energy Regulation (NAER) has recently approved new tariffs for natural gas, electricity and heating, after acquisition prices of natural gas and imported electricity have grown, and this will fuel the inflation for sure. Under a NAER decision, natural gas tariffs have grown by 27 percent on average, up to 3,523 lei per 1,000 cubic metres, which is by 748 lei more than at present.

Thus, consumers of up to 30 cubic metres of natural gas a month will pay 3,414 lei per 1,000 cubic metres, while those consuming more than 30 cubic metres will pay 3,813 lei. Electricity tariffs have been raised by 17 percent on average. Thus, the tariff for RED Union Fenosa was increased from 0.71 lei up to 0.79 lei/kWh, while other consumers will pay 1.1 lei per kWh. RED Nord and RED Nord-Vest will introduce a single tariff of 1.2 lei/kWh for all consumers. Heating tariffs were raised by 36.4 percent, up to 454.7 lei per Gcal. Consumers supplied heating by CET 1 will pay 512.05 lei/Gcal, CET 2 – 410.4 lei/Gcal, and final consumers of CET Nord will pay 786 lei per Gcal.

2. Real sector

Industrial production up by 4.6 percent in 1^st semester…

All industrial enterprises have made production worth over 14.1 million lei in current prices in January-June 2008, which is by 4.6 percent more than in the same period of 2007. The growth was particularly motivated by advance of production of food and drink industry by 12 percent and energy sector by 8 percent; these sectors controlled 36.4 percent and 13.1 percent and contributed to the growth of overall production with 4 percent and more than 1 percent. Following sectors have achieved important rises: wine making – about 1.6-fold (by controlling 8.3 percent, it contributed with 3.2 percent to the growth); distilled spirits 1.4-fold (by controlling 3.1 percent, it contributed with 1 percent to the growth), etc.

3. Foreign sector

Moldovans sent home more than 606 million dollars in first 5 months…

According to NBM accounts, remittances in Moldova have increased 1.6-fold in January-May 2008 compared with the same period of 2007, and exceeded 606 million dollars, with this amount being almost similar to all inflows for 2005. As much as 75.3 percent (456.5 million dollars) of transfers out of all remittances operated in the first five months of this year have been performed via rapid money transfer systems. In particular, remittances via commercial banks accounted for 89.72 million dollars in January 2008, 104.55 million dollars in February, 126.4 million dollars in March, 154.29 million dollars in April, and 129.75 million dollars in May. Remittances operated via commercial banks in Moldova in 2007 accounted for about 1.22 billion dollars, by almost 43 percent more than in 2006. Largest remittances came to Moldova from Russia and Italy.

Diagram 1. Evolution of remittances



Source: NBM

4. Labour market

The medium monthly salary of an employee in national economy amounted to 2,429 lei (about 250 dollars) in January-May 2008 and it rose by 26 percent compared with the similar period of 2007. The real salary index for the same period has increased by 9 percent. The medium salary in budgetary sector amounted to 1,978 lei and the average wage in real sector accounted for 2,665 lei. The medium remuneration in June was 2,751 lei, which is by 8.4 percent more than in May. The medium monthly salary has grown by about 24 percent compared with June 2007. The medium pay in budgetary sector amounted to 2,642 lei and it rose by 21 percent compared with the similar period of the precedent year. The average monthly salary in real sector was 2,805 lei and it rose by 25 compared with the same period of last year.

Reflections: it is true that real salaries are on the rise, as noted by president at a conference held to sum up results for the first half of the year, but they rose faster than the productivity. Therefore, Moldova’s competitiveness has decreased. According to official accounts, salaries have annually increased by 10 percent in the past three years, and this rate was maintained in 2008, too. In reality, the rise was higher particularly in areas which strongly develop such as banking, building, services, etc. On the other hand, such a rise of salaries (and earnings) is the ground of consumption and economic growth implicitly, but a consumption-based growth cannot ensure a lasting convergence in terms of real indicators. But investments generating a high value-added, which is a crucial factor for a healthy economic growth, is needed to improve the output. A building-based growth like that in Moldova involves credit transactions, speculative investments and money is often originated from shadow economy and it cannot be invested to bring profit in productive sectors. This finally encourages an unreasonable boom of housing prices.

Transdnistrian Problem

Efforts to resume negotiation process

President Vladimir Voronin met mediators and observers of the "5+2" Transnistrian settlement negotiations on July 22, 2008. The meeting should open perspectives to resume the negotiation process. But this did not happen because Transnistrian leader Igor Smirnov has announced that he would not meet international mediators and observers separately, and they were honoured to meet Smirnov’s deputy. The final "5+2" meeting at which chief negotiators of the conflicting sides have joined representatives of mediators and observers in the "3+2" format was of protocol routine.

In spite of the clearly uninterested conduct of the Transnistrian side to resume negotiations, President Vladimir Voronin was optimistic that a solution to the Transnistrian conflict will be found by the end of this year. According to Voronin:

• Proposals by Moldovan authorities on settlement of the Transnistrian conflict stipulate a complex political, social, humanitarian approach;
• All documents on settlement of the conflict will be approved during "5+2" negotiations;
• The proposed solutions shall not affect the principles stipulated by the law on basic regulations of the special legal status of localities from the left bank of the Dniester, adopted by Moldovan Parliament through consensus on July 22, 2005;
• The conflict resolution process shall go along with the process of consolidation of confidence-building actions between the conflicting sides;
• The 2009 parliamentary elections will be held countrywide.

The Special Representative of the OSCE Chairman-in-Office, Ambassador Heikki Talvitie, EU Special Representative to Moldova Kalman Mizsei, and Deputy Assistant of U.S. Secretary of State David Merkel have backed in principle the viewpoints by President Voronin. Representatives of Ukraine and Russia Aleksandr Gorin and Valeri Nesterushkin stressed the necessity of a joint effort by the parties in settling the conflict (according to Moldpres).

Pretexts to delay the resumption of negotiations

Transnistrian leader Igor Smirnov has continued to insist on a response by President Voronin regarding the draft interstate agreement between Moldova and Transnsitria. By maintaining his interest for resolving social-economic problems, Smirnov spoke out about working groups established at Voronin’s proposal, but insisted that they should be called "constitutional groups" because their activity could have important political effects. This explanation is irrelevant and it rather reveals the desire to delay the resumption of the negotiation process.

Phenomenon in Transnistrian army

Three soldiers died in the Transnistrian army during one year in suspicious conditions. The latest case was recorded on July 18, 2008. Transnistrian authorities tried to hide the information, but they had to make public this case after a week, being pressed by the public. As usually, Transnistrian authorities promised to investigate the case, but hinted that the last death was also an accident. They are not ashamed of the big number of accidents, refusing to recognise the existence of "irregular" relations in army.

Foreign Affairs

European Integration

Joint statement by 11 diplomatic representatives of EU states and institutions in Moldova

On July 17, 9 ambassadors of EU member states (Austria, Czech Republic, France, Germany, Lithuania, Poland, Romania, and the United Kingdom) along with the European Commission Delegation and EU Special Representative to Moldova released a joint declaration on democracy and freedom of expression in Moldova. The statement raises the concern of ambassadors with latest political developments and evolutions in the field of the media which could jeopardise free, fair and democratic parliamentary elections in 2009, in particular: actions taken by law enforcement bodies against the media, editorial independence of TeleRadio Moldova, pluralism in broadcasting sector, intensified harassment of opposition political parties and their supporters by law enforcement bodies, increased electoral threshold, prohibition of pre-electoral alliances and ban on holders of multiple citizenship to run elective offices.

European ambassadors called upon Moldovan authorities to deliver the Electoral Code to the Council of Europe and OSCE as soon as possible in order to survey it, and to honour all recommendations by these institutions concerning the electoral threshold, electoral blocs and effective exercising of the right to be elected by all citizens. At the same time, diplomatic missions are ready to cooperate with Moldovan authorities in ensuring the exercising of the right to free expression and good organisation of the 2009 parliamentary elections.

Shortly after the release of the statement, President Vladimir Voronin has replied that Moldova’s image in European capitals is based on rumours, old stereotypes and information taken over from the opposition media only. However, the president continued, Moldovan authorities will do their best to resolve real problems signalled by EU representatives and they will bring "counterarguments" to unconfirmed cases and will inform the EU about real situation in the areas concerned.

Note by ADEPT. This statement comes shortly after PACE President LLuis Maria de Puig has criticised Moldovan authorities during a formal visit to Chisinau for slow democratic and ineffective reforms relating to independence of the media and good functioning of the judicial system and Prosecutor-General’s Office, and raised concerned with new amendments to the Electoral Code.

National Commission for European Integration has a temporary website

The temporary website of the National Commission for European Integration is hosted by the Government website, while the website of the Commission will be launched on September 1, 2008.

Bulgaria simplifies transit regime

Shortly after Romania has simplified the transit regime, Bulgaria introduced a similar regime on July 18, 2008. Citizens of third countries may transit Bulgaria without transit visas by showing the following documents issued by:

• Countries in the Schengen area: single visas; long-term visas; stay permits;
• Romania: Short-term national visas, long-term stay visas and stay permits;
• Cyprus: Short-term national visas, long-term stay visas and stay permits;
• Switzerland and Lichtenstein: stay permits.

The term to transit Bulgaria is 36 hours. The right to transit the country without visas will be applied only for a transit purpose. Entrance and exit via border crossing points with the same country, as well as transit are prohibited should the declared route have no connection with stay permits and visas.

Bilateral cooperation

Republic of Moldova – Romania

President Voronin told a news conference held on July 23, over the end of the first semester of 2008 that political relations between Moldova and Romania are at a positive stage, inclusively due to the recent visit by Romanian Foreign Minister Lazar Comanescu to Chisinau and latest constructive negotiations between the two countries regarding the basic and border treaties. In addition, the president stressed that the problem concerning the name of the language was remedied and the basic treaty will be signed in official languages of the sides. However, Romania’s decision at high level is needed to develop negotiations.

Note by ADEPT. President Voronin’s optimism is not shared by the Romanian side, which did not release any commentary or statement regarding the progress of negotiations on signing of the basic and border treaties between the two countries, except for a formal press release.

Republic of Moldova – U.S.

The United States has assigned Pakistan-born U.S. citizen Asif Chaudhry as new U.S. ambassador to Moldova. He will take over this office in August.

Multilateral cooperation

Republic of Moldova – Council of Europe

ECHR decisions

The European Court of Human Rights passed a decision on Flux (nr. 6) vs. Moldova on July 29, 2008. Flux claimed the violation of ECHR Article 10 (freedom of expression) in front of the Court, but the ECHR established that the freedom of expression was not violated.

Studies, Analyses, Comments

Terms to schedule elections
Igor Botan, 31 July 2008

Reactions and rhetoric by leaders of political parties reveal that the 2009 parliamentary elections are being prepared. In this context, it is worth to know exact terms to hold elections. The things seem to be simple should parliamentary elections not be synchronised with presidential elections

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Romania is becoming main destination for Moldovan exports. Is there any connection with growth of lohn supplies?
Adrian Lupusor, 31 July 2008

May has brought a great change of principle for Moldova’s external trade. In particular, Romania has become the main destination country for Moldovan exports, ranking the Russian Federation on the 2nd place

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