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Activity of Public Institutions

Parliament
Government
Presidency

Dynamic of economy: truth or challenge? by Iurie Gotisan

Activity of Public Institutions

Parliament

1.1. Appointments. Dismissals

The Parliament has declared the parliamentary seat of Mrs. Adriana Chiriac, elected on behalf of the Christian Democratic People’s Party, vacant. Mrs. Chiriac tendered her resignation after getting a job in Romania that is incompatible with the parliamentary seat.

Legislative acts

Law on completion of the Law on enactment of Titles I and II of the Fiscal Code. The document says that taxpayers which provide and/or renovate free of charge the people’s real estate deteriorated after the July-August 2008 floods will not be applied the Fiscal Code regulations on income taxes and will be allowed to deduct the spending for renovation and/or providing of the concerned estate. Also, the pecuniary damages paid to individuals for the July-August 2008 natural disasters are not regarded as taxable revenues and are not included in the gross revenue.

Law on completion of Article 4 of the law on state tax. Under modifications, individuals and legal entities are exempted from state tax for the authentication of contracts signed to compensate damages suffered after the July-August 2008 floods.

Law on modification of some legislative acts (Law on sale of goods, Law on commodity exchanges, Law on entrepreneurial cooperatives). The document was promoted to ensure the implementation of the new laws on arbitrage and commercial arbitrage, replacing the old notions with updated regulations in the field.

Law on completion and modification of some legislative acts. It brings amendments to the Code on Administrative Contraventions and Criminal Code with the purpose to improve and consolidate the national legislation against trafficking in human beings and adjust it to European standards. In particular, Article 170/1 concerning the "Organisation of beggary" was removed, and now these deeds fall under the incidence of Article 302 of the Criminal Code concerning the "Initiation and organisation of beggary". In order to decriminize the Criminal Code and optimise the punitive policy, the regulations on trafficking in human beings were updated.

Laws on ratification of some international acts:

• The Council of Europe Framework Convention on the Value of Cultural Heritage for Society, adopted in Faro on October 27, 2005;
• The Agreement between the Republic of Moldova and Slovakia on the reciprocal promotion and protection of investments, signed in Chisinau on April 7, 2008;
• The Agreement between the Government of the Republic of Moldova and the Government of the Federal Republic of Germany on the 2006 financial cooperation, signed in Chisinau on April 17, 2008;

Decision on completion of the Parliament Decision approving the list of the National Army assets on sale. The list is completed with several aircraft of the National Army (AN-72 and AN-26), various pieces and munitions.

1.3. Parliamentary control. Statements

Hearings

The Parliament has heard reports concerning:

• The remedying of consequences of the last summer natural disasters;
• The remuneration in the budgetary system;
• The situation on the monetary and foreign exchange markets.

Questions. Interpellations

The parliamentary majority including the Chairman of the Parliament have left the sitting hall at the first session of questions and interpellations.

Veaceslav Untila, a parliamentarian representing the Moldova Noastra (Our Moldova) Alliance, has asked the Government to provide information about accumulations to the state budget from the service of 215 ships floating under Moldova’s flag.

Vladimir Filat, leader of the Liberal Democratic Party of Moldova (PNL), has asked information about the use of the Government reserve fund worth 180 million lei.

Vitalia Pavlicenco, Chairwoman of the National Liberal Party, has asked the Interior Minister to collect facts concerning the case of motorist Nicolae Stamati who was allegedly imposed to bribe policemen.

Statements

Parliament Chairman Marian Lupu has briefed journalists at the beginning of the autumn-winter session as regards:

• The possible debating of a new amendment to the electoral legislation (concerning the electoral threshold, ban on electoral blocs). However, prospects of amendments in the area were not concretised;
• Expressing optimism that the forthcoming elections will not affect the working climate in the Parliament;
• The key documents of the session will be: the 2009 State Budget Law, the Law on state social insurance budget, and the Law on mandatory health insurance fund;
• The Parliament will pay a special attention to the adjustment of national legislation to European standards; cooperation within various international organisations; bilateral parliamentary cooperation; cooperation with civil society; parliamentary control.

Leaders of parliamentary factions have delivered speeches regarding visions on the ongoing session:

• The parliamentary faction representing the Moldova Noastra (Our Moldova) Alliance (AMN) has accused the Government over situation on foreign exchange market, sought the abrogation of amendments which allegedly undermine the democracy (the Electoral Code, restrictions related to dual citizenship), demanded the resumption of live broadcasting of parliamentary meetings at the national television channel and the deferral of the National Wine Holiday, as vine growers are in a hopeless situation;
• The parliamentary faction of the Christian Democratic People’s Party (PPCD) has urged the state leadership to be more cautious towards Russia’s recommendations on settlement of the Transnistrian conflict, as developments in Georgia proved that Russia is an aggressor and Moldova should be very careful over any proposal by this country. The PPCD asked the Government to keep remedying consequences of floods and called upon parliamentarians to be more responsible while voting the National Security Strategy, as the Law on national security concept is imperfect and the strategy should be better. The PPCD has assured that it wants to contribute to the affirmation of Moldova as a successful state;
• The faction of the Democratic Party of Moldova (PDM) has accused the Government of abusively hiding negotiations on the Transnistrian issue, demanded that parliamentarians be informed and involved in drafting the negotiation documents. It considers that the future legislature will be a coalition and proposes not to control small and medium-sized enterprises for a three-year term;
• The faction of the Party of Communists of the Republic of Moldova (PCRM) has invited opposition deputies to cooperate, to give up groundless criticism and support the parliamentary majority to adopt laws.

Deputy Vitalia Pavlicenco has presented a PNL statement to the Parliament, which condemns Russia for having recognised the separatist regions of Abkhazia and South Ossetia and reiterates the necessity to build the inter-state union Romania-Republic of Moldova as the unique project able to bring Moldova closer to the European Union.

Government

2.1. Appointments. Dismissals

Vasile Botnari was appointed Director of the Transport Agency. Previously, Mr. Botnari was manager of the Air Moldova Company.

2.2. Decisions

Decision on salary increase for some budget sector employees. Starting October 1, 2008, the earners paid accordingly to the lowest salary categories will receive salaries based on maximum quotas of the salary grid. Thus, the 1^st salary category will be 500 lei (440 lei before), and the 15^th category will be 1,200 lei (1,030 lei before). Along with introduction of new salary rates, all rises, supplements, other salary payments established in percent of the service wage are calculated accordingly to the new salary rates.

Decision approving the regulation on funding the housing for people hit by the July-August 2008 floods. Under the decision, the Ministry of Construction and Territorial Development (MCDT) was allocated 25 million lei collected on a special account for the assistance of people hit by floods. October 15, 2008 is the deadline to purchase houses and the MCTD will further report the spending of the allocated funds to the Government.

Decision on creation of the Transport Agency. The agency is formed after the reorganisation of the Ministry of Transport and Road Management and State Civil Aviation Administration and it will be in charge with ground, air and rail transports. The Ministry of Construction and Territorial Development will be further in charge with road maintenance and management.

Decision on implementation of the one-stop-shop within the Licensing Chamber. It approves a list of documents and information which will be approved, confirmed or checked via the one-stop-shop procedure and compel public authorities and regulation/control institutions to ensure the access of the Licensing Chamber to updated state information resources. If the competent authorities or public institutions fail to respond to the chamber’s requests in due term, the information or documents concerned will be considered confirmed or approved.

Decisions on the allocation of funds:

• The Ministry of Justice is allocated 2.17 million lei to finish reconstruction works at the medical facility of the Rusca-based Prison;
• The local councils in Hincesti and Soroca are allocated 383,000 lei to compensate victims of political repressions.

Decisions approving some plans:

• Aimed to stimulate the comeback of Moldovan migrant workers from other countries.

Decision on abrogation of some governmental decisions. It abrogates 61 decisions adopted in 1994–2008 to approve and promote some out-of-date policy documents. The decision represents an outcome of the commission for the revision of policy documents. created in June 2008.

1.3. Sittings. Decisions. Statements

Press conference by prime minister

Prime Minister Zinaida Greceanii has analysed evolutions in the economic, social sectors, foreign policy, stating among others that:

• Despite less encouraging factors, a coherent progress was made in all key directions of the Government Programme;
• The uplifting state of things in the macroeconomic area is also confirmed by foreign development partners (IMF), although so-called analysts are discontent, releasing apocalyptic scenario about prospects of the Moldovan economy;
• The acting Government will not accept another way but the macroeconomic stability course, no matter how popular or unpopular this approach will be;
• The inflation rate has grown by 6 percent this year, being part of the lowest rates in the region;
• The Consumer Price Index is again under control (below 10 percent a year) despite of increasing natural gas and electricity tariffs, and therefore, the National Bank of Moldova (NBM) has recently lowered the mandatory reserve and basic rates by 1.5 percentage points each;
• The Gross Domestic Product rose by 6.2 percent in the 2^nd quarter (the GDP has grown by 5.4 percent in the 1^st semester);
• The evolution of the trade balance and existing problems in starting up business raise concerns, while pace of foreign direct investments rise is encouraging;
• The draft state budget law for 2009 was built on the following principle: expenses may grow only on the basis of an economic growth; social policies continue to be promoted; budgetary revenues will reach 17.7 billion lei and they will grow by about 21 percent compared to 2008, while expenses will reach 18.3 billion lei; allocations for the social sector will be raised by 28 percent compared to 2008; for the first time, real funds are planned for 2009 to ensure the territorial reintegration of Moldova and enforce the Law on political parties (the budget includes about 8 million lei);
• The external activity is related to Moldova’s presidency in 5 regional organisations and the November 13–14 Summit of CIS prime ministers, in Chisinau, is expected to be a special event.

Government to cooperate more efficiently with supreme financial control body

A sitting with the participation of Cabinet members and representatives of the Accounting Chamber has tackled ways of cooperation and difficulties faced by the chamber during its work, as well as problems discovered after controls. In particular, it signalled insufficient capacities of financial-accounting subdivisions for the strategic planning of fund management based on the programs’ budgeting; necessity of auditing natural resources, optimise the use of public patrimony and capital investments. In this context, the Prime Minister asked ministers to pay more attention to the execution of decisions by the Accounting Chamber and instructed the Government Apparatus to monitor their execution. It was decided that reports on execution of recommendations by the Accounting Chamber on sectors of economy will be heard at public sittings every semester.

Creation of the National Council for Participation

Following certain problems, the Government has finally succeeded to set up the representative forum of civil society organisations called National Council for Participation (NCP), which brings together organisations of the private sector, academia, NGOs, mass media. The NCP will participate in elaboration, implementation, monitoring and assessment of public policies, being able to help improving the governing, ensuring transparency and efficiency of the use of public funds, combating corruption. It advises the interdepartmental strategic planning committee led by prime minister and includes 33 members at present.

U.S. assistance for law enforcement bodies

The U.S. Government will assist the Moldovan Government to develop skills of law enforcement bodies on the basis of an amendment to the Agreement on control on drugs and application of legal norms. The additional funding is foreseen for the implementation of a project on development of law enforcement bodies that aims to consolidate their skills of investigating and proceeding against grave violations, while the financial assistance is planned for the basic training and purchase of necessary equipment.

Presidency

3.1. Decrees

Moldova’s President has signed a decree on appointment of Alexandru Cujba as Ambassador, Permanent Representative of the Republic of Moldova to UN.

Under a presidential decree, "Ordinul Republicii" (the Order of the Republic) was awarded to Leonid Babii, Director-general of the Balti-based enterprise Barza Alba.

The chief of state has signed a decree recalling Vasile Sturza as Moldova’s Extraordinary and Plenipotentiary Ambassador to the Russian Federation and the Republic of Kazakhstan.

Mutsuo Mabuchi, outgoing Extraordinary and Plenipotentiary Ambassador of Japan to the Republic of Moldova, was awarded the Order of Honour as a sign of deep gratitude for his special contribution to developing and deepening friendship and cooperation relations between Moldova and Japan.

Minister of Transport and Road Management Vasile Ursu was revoked over reorganisation (liquidation) of the ministry.

3.2. Sittings. Decisions. Statements

Totals and plans for Government

Moldova’s President has chaired a working meeting at which he concluded some results of the Government activity and indicated new tasks for the next period. He appreciated the Government activity, stating both social-economic accomplishments and successful management of the crisis situation relating to the summer floods. Vladimir Voronin pointed out short and medium-term goals to be fulfilled by the central executive, in particular:

• To examine the execution of the governing programme within 10 days;
• To work out and adopt draft laws included in the European Union-Moldova Action Plan and intensify actions to finally sign a new agreement with the EU;
• To fulfil budgetary tasks for this year and honour all obligations stipulated by national programmes and strategies (gasification, water supply, planting of orchards and vineyards, renovation and enlargement of irrigation networks, rise of the number of agricultural cooperatives, consolidation of farm land, opening of new technological machine stations;
• To sustain the ecological agriculture, opening of new abattoirs and frigorific installations, carrying out autumn agricultural works;
• To implement all actions related to the Youth Year; take efficient actions to implement latest initiatives on gradual rise of scholarships and teachers’ salaries;
• To improve the nutrition of children in polyvalent and boarding schools;
• To estimate the execution of the "Salt" Programme; to primarily implement the Law on social assistance;
• To construct and put into operation all planned social facilities, some public medical-sanitary institutions; speed up the renovation of healthcare centres in rural areas.

Sitting of the National Commission for European Integration

The National Commission for European Integration (NCEI) resumed its activity on September 26 after more than 2 months. At the beginning of the sitting, the President of Moldova commented latest political developments which are directly connected to the European integration issue, and revealed that the draft "Eastern Partnership" is being actively elaborated in Brussels and it is expected to cover integrationist components such as deep free trade, labour force mobility and eventually a road map for the liberalisation of the visa regime. Mr. Voronin noted that these issues will be discussed during negotiations with the European Union on a new agreement with Moldova and this is what Moldovan authorities are most seriously interested in. The Government and Parliament were invited to establish a tight interaction in honouring all commitments assumed by Moldovan authorities. The next NCEI sitting is set for October 21.

New concerns with exploitation of mineral resources

Vladimir Voronin has chaired a sitting of the Supreme Security Council (SSC) at which findings of an analysis on exploration, exploitation and sale of mineral resources and activity of quarries were presented. Under a previous SSC decision, a special commission was created to examine the situation in the area, which reported grave violations in exploiting mineral deposits, in particular, illegal extraction; non-cultivation of exploited fields and lack of cultivation specialists; lack of control and massive abuses, including by local authorities in mineral exploitations; dispersed responsibilities and conflict of interests between structures in charge with supervising the exploitation of mineral resources; appearance of chaotic installations to illegally extract building materials for commercial purposes; illegal and fraudulent trading of building materials without paying taxes, for exaggerate prices, without origin documents or any quality guarantees of materials with fake invoices. Causes of this situation include among others low, inadequate sanctions for such offences. The chief of state urged the Government to take decisive actions in order to improve the situation in the area of exploration, exploitation and trading of mineral resources by working out an action plan aimed at ensuring the legality, ecological and economic security of extraction of deposits. The national agency of mineral resources will be created by October 30 within the Ministry of Environment and Natural Resources on the basis of ministerial subdivisions and departments which have tangencies with this sector, without raising the bureaucratic apparatus. Also, the examination and modification of the Subsoil Code will be accelerated by October 30, the Criminal Code and Code of Administrative Contraventions will be elaborated and modified to introduce harsher sanctions.

Conference "Policies on science and education"

The chief of state has addressed the International Conference organised under the auspices of the Academy of Sciences of Moldova, stating among others as follows:

• The human capital is the only available development resource of Moldova, while the underrating of this detail had produced an unprecedented economic and social fall of Moldova in the first decade of independence;
• At a certain stage, the labour market has lost the qualified labour force able to be engaged in possible investment offers;
• The reform promoted through the Code on Science and Innovations was right, expenses for the science have grown several fold, the self-appreciation of the scientific community, its self-requisition and responsibility have grown suddenly;
• The work on the draft Education Code was finished and the document regulates all education levels, from pre-school to post-graduation. The code will stipulate that starting 2009 the average salary of teachers shall equal the average salary in the economy;
• Expenses for education will go up for certain long-term priorities of major importance.

Implementation of the national gasification programme

A report on fulfilment of the gasification programme until 2010 was presented at a working meeting at the Presidency headquarters. According to the report, gas pipes have been installed in 637 localities, gas pipes have been installed to the bounds of another 168 localities and gas pipes leading to 71 localities are being built in 2008 (the gasification of 893 out of 1,531 localities of the country is planned by the end of this year). Data on the investment programme on building natural gas pipes by SA "Moldova-Gaz" were provided at the sitting, and it says that 843 kilometres of natural gas networks will be constructed. The chief of state reiterated the special importance of implementing the national gasification programme in due term and instructed persons in charge with implementing the programme to continue doing their best to reach this goal.

Reconstruction of national cultural-historic heritage

Actions and plans for the renovation of the Eugen Ionesco Theatre, Strada Trandafirilor Street, Organ Hall, National Theatre of Opera and Ballet, Republican Theatre Luceafarul, National Philharmonic, National Museum of Fine Arts, Museum House Alexandru Donici, Lazo Manor, Academy of Music, Theatre and Fine Arts, etc. have been reviewed.

Jubilee of the Moldovan State

The chief of state has chaired a sitting of the state commission in charge with actions dedicated to the 650^th anniversary of the Moldovan State, which heard information about implementation of the action plan on the anniversary. Participants shared opinions about details of the action plan, considered concepts of a jubilee medal and order Bogdan Intemeietorul, which will be printed as state a state distinction. The chief of state emphasised the need to analyse the situation in the area of Moldovan heraldry and lack of qualified specialists. Vladimir Voronin insisted on finalisation of a timetable for 2009, which would be correlated with the Christian-Orthodox calendar and delivered to the commission for approval.

Celebration of the Hunter Day

The chief of state has attended a festivity dedicated to the 3^rd edition of the Hunter Day organised by the Association of Hunters and Fishers of Moldova that Mr. Voronin chairs as honour president. He greeted the audience and noted that hunting conditions have been improved much in Moldova in the past years, with hunting areas being enlarged and hunting species being raised, attracting foreign tourists. Speaking about recent restrictions on rabbit hunting introduced under a governmental decision for a two-year term, the chief of state noted that this decision came after the observed degeneration of rabbit population in Moldova and in the region. It was stressed the imperative to respect legal and normative orders regulating the hunting, the necessity to correct administrate the wild fauna. During the Hunter Day the chief of state has awarded special prizes to representatives of the best hunting collectives in the country and visited exhibitions of naturalised objects, hunting trophies, guns and utensils.

Economic Policies

1. Inflation and prices

Inflation on the decline…

According to NBS accounts, the Consumer Price Index (CPI) rose by 0.7 percent in August 2008 compared with July 2008. The cumulated inflation rate this year is 6 percent, which is among lowest rates in the region. As a result, the annual inflation rate has decreased from the highest rate of 16.9 percent in May 2008 down to 11.7 percent in late August.

An analysis of factors which influenced consumer prices last year and their possible evolution together with other factors for the next period forecasts a further decline in annual inflation rate and gradual adjustment to the planned level. In these conditions, the National Bank of Moldova considers that there is no background now to continue tightening the monetary policy and reduced the basic interest rate from 18.5 percent down to 17 percent and the mandatory reserve rate from 22 percent down to 20.5 percent. This is a positive signal for the market, while lowering the interest rate on loans by one percentage point and encouraging the crediting would be a first effect.

2. Real sector

Industry up by about 3 percent in January-August…

According to NBS accounts, all industrial enterprises in Moldova made production worth more than 19.1 billion lei in current prices in January-August 2008, which is a 2.8-percent rise. The general rise of production was particularly linked to the growth of production made by food and drink industry (up by 7.5 percent) and energy industry (up by 6.7 percent), which hold 37.6 percent and 11.0 percent respectively.

At the same time, production made by the following sectors has decreased: clothes manufacturing by 11.1 percent; fruit and vegetable canning by 17.2 percent; beer making by 17.9 percent; oil and fat making by 10.2 percent; paper and cardboard manufacturing by 19.9 percent; glass manufacturing by 12.3 percent; cigarette making by 16.6 percent; concrete, gypsum and cement manufacturing by 13.2 percent.

3. Public funds

Government approves the 2009 budget law…

According to a governmental decision, revenues of the 2009 budget will count for about 17.735 billion lei, which is by 21 percent more than planned for this year. Expenses for next year will account for about 18.309 billion lei, by 23 percent more than this year. The state budget deficit will amount to about 574 million lei and it will be covered by revenues raised from privatisation and external credits. The draft law was built on a planned 6-percent GDP growth and a 9.5-percent inflation rate. The 2009 budget law was submitted to the Parliament for examination.

4. Banking sector

Banking assets will reach 65 percent of GDP…

The Republic of Moldova has much to recover in order to reach the banking penetration rate (share of overall banking assets in GDP) of East European countries. Although the growth rate of banking assets is much higher than the economic development, they reached about 60 percent of GDP in 2007, compared with the average of over 70 percent on region. Leading countries in the rating had the following rates in 2007: Latvia 144.2 percent, Estonia 117.5 percent, Croatia 114.4 percent and Slovenia 113.3 percent Diagram 1. The domestic banking is sensibly developing, as overall assets on the banking rose by about 18 percent in eight months of 2008, compared with late 2007, and by more than 28 percent compared wit August 2007.

Diagram 1 Ratio of overall banking assets in some European states, 2007



Source: Fitch IBCA

Banking assets estimated at about 3.7 billion dollars…

Assets rose by about 38 billion lei (about 3.7 billion dollars) in eight months of this year due to the growth of deposits by population and credits and financial leasing. Interest-carry savings of individuals rose by about 22 percent in six months and by nearly 45 percent compared with late August 2007. Interest-carry deposits have grown by more than 18 percent per total. Credits and (net) financial leasing went up to about 23 billion lei after a 15-percent rise in January-August 2008 and an advance of about 35 percent compared with August 2007.

The first-degree capital has grown up to 6.31 billion lei or by 20.75 percent more than earlier this year, proving in continuation the consolidation of the system and a good capacity to cover eventual financial losses. The share of foreign investments in banks’ capital rose by 1.1 percent up to about 73 percent. The average sufficiency of the risky capital on system has increased by 2.4 percent up to 31.4 percent (the minimum necessary level is 12 percent), compared with late 2007, and this proves in continuation a risk-free investment potential of banks equivalent to security of depositors.

5. External position of country

Fitch IBCA lowers Moldova’s rating…

The international ratings agency Fitch has descended Moldova’s rating from "positive" to "stable", which is associated with long-term perspectives in foreign and national currencies, following the deteriorated external financing to the country and inflationist pressures. The agency also confirmed the rating "B-" for long-term credits in foreign currency and "B" for long-term credits in domestic currency. The lower ratings for long-term credits in foreign and domestic currencies prove the decline of external finances provided to Moldova and continuation of inflationist pressures.

Moldova has faced serious external shocks which hit its long-term prospect. The price of Russian natural gas exported to Moldova continued to grow this year, while Moldovan wine exports to Russia are not as large as before the 2006 and 2007 embargo. Moldova’s economy has experienced a significant impact of these shocks. The current account deficit of Moldova has grown up to nearly 18 percent of GDP. Moldova could face negative political and economic shocks due to the high trade deficit, increasing external debt, low liquidity and exposure to the trade with Russia, Fitch experts explained.

Moldova faces a serious structural deficit of the balance of payments hitting 50 percent of GDP. This deficit is partly compensated by remittances, which Fitch estimates at 20 percent of GDP in 2007. The external debt of the private sector is growing fast and rose up to 32 percent of GDP in 2007. The revenue per capita of about 1,300 dollars is low for the East European countries, though it is a little higher than the average of 1,240 dollars for countries with a rating "B".

At the same time, several factors explain Moldova’s ratings. In particular, the country’s state debt is on ongoing decline and stood for 29 percent of GDP in 2007, which is less than the average of 33 percent for countries with a rating "B". In 2007, Moldova did not face a serious deficit (about 1 percent), and the Government promises to ensure a balanced budget on medium term. At the same time, Fitch fears that the 2009 parliamentary elections could pressure the budget. In 2007, Moldova has become a net external creditor in terms of state debt (official reserves exceeded 1.5 billion dollars) and ensured a coverage of imports for more than three months in June 2008). The ratio between debt and revenues per capita is 68 percent and this is the lowest rate for countries with a rating "B".

Transdnistrian Problem

Voronin-Smirnov meeting not taking place

The meeting between President Vladimir Voronin and Transnistrian leader Igor Smirnov set for the third decade of September 2008 did not take place. The intrigue of the meeting concerned consisted in preparing the ground for an eventual trilateral meeting in November 2008, with the participation of Russian President Dmitri Medvedev. According to the Moscow-based newspaper Kommersant, the November-scheduled meeting should crown Russia’s efforts to prove before the summit of NATO foreign ministers that Russia is capable to settle frozen conflict on a peaceful way as well.

The Voronin-Smirnov meeting was allegedly cancelled for very curious reasons: in particular, the parties failed to agree on the time and place for meeting; there were no security guarantees for the Transnistrian leader, etc. But the most plausible argument was that parties did not want to give up previous approaches relating to principles of conflict settlement. Moldovan authorities insisted on the documents they have worked out in the last two years and on the "5+2" negotiation process. In their turn, Transnistrian authorities insisted on the recognition of Transnistria and signing of a cooperation agreement with the Republic of Moldova.

Moldova’s position on Transnistria settlement exposed on U.N. platform

While addressing the 63^rd session of the United Nations General Assembly on September 29, 2008, Minister of Foreign Affairs and European Integration Andrei Stratan told the viewpoint of Moldovan authorities regarding the reform of the Security Council, which should encourage and optimise "U.N. actions in the area of international peacekeeping and security, development of cooperation with regional organisations and member states, including with the view to settle conflicts in various regions of the world."

According to Andrei Stratan, "developments in South Ossetia (Georgia) have proved one more time that frozen conflicts are instability hotbeds and threat the regional and international security. Intensifying international cooperation to settle conflicts and prevent in future such situations of crisis which endanger the sovereignty and territorial integrity of states has a major importance for the Republic of Moldova as well, as it faces a frozen conflict in eastern districts of the country."

In this context, Mr. Stratan reconfirmed Moldova’s position regarding some aspects of the Russian-Georgian conflict and vision on principles to settle the Transnistrian conflict. He assured that the Republic of Moldova:

• Opposes categorically any methods to settle conflicts by force, subscribing to the French European Union Presidency concerning the degradation of situation in South Ossetia read at the August 8, 2008 extraordinary meeting of the OSCE Permanent Council, and calls for the complete fulfilment of the Peace Plan mediated by the French EU Presidency;
• Considers that the unilateral recognition of Abkhazia and South Ossetia will not stabilise the situation. This step will reduce the responsibility of the conflicting sides to find a compromise between nations and their capacity to find fair solutions by respecting the territorial integrity and protect human rights and fundamental freedoms;
• Considers that situations such as that faced by Georgia shall be settled only in compliance with the Helsinki Final Act, the Charter of the United Nations and all effective international law principles;
• As regards the conflict in eastern districts (Transnsitria), it has acted and keeps acting coherently in compliance with the law on basic provisions of the special legal status of localities from the left bank of the Dniester, which was unanimously adopted by Parliament on July 22, 2005 and sanctions the resolution of the Transnistrian conflict on political ways only;
• Considers that the demilitarisation and democratisation of the Transnistrian region are essential premises of a viable resolution of the Transnistrian conflict;
• Is concerned with making conditions to impel the settlement process. For this purpose, President Vladimir Voronin has released initiatives on building confidence and security between both banks of the Dniester, in particular, by ensuring the freedom of move, the joint participation in working out and implementing projects on restoration and modernisation of infrastructure and resolution of social problems;
• Adopted the conflict resolution strategy based on a complex approach, "package initiatives", all conflict-related political, economic, social and humanitarian issues, which stipulate the elaboration and adoption of a special legal status for the Transnistrian region by respecting the sovereignty and territorial integrity of Moldova, consolidating the neutrality status and pulling out foreign troops from Moldova, recognising the property rights and providing sure guarantees to population;
• Appreciates the work of the EU Border Assistance Mission to Moldova and Ukraine and its tight cooperation with competent bodies from both countries in the area of border management, increasing border security and transparency, in order to create more favourable conditions for the Transnistria settlement process;
• Supports efforts by mediators and observers aimed to resume the 5+2 negotiations and find a definitive solution to the conflict.

Foreign Affairs

European Integration

EU-Moldova PSC Troika Meeting

Brussels hosted the Meeting of the European Union – Moldova Political and Security Committee (PSC) Troika on September 17. The meeting focussed on recent developments in settling the Transnistrian conflict, results of the EU Border Assistance Mission (EUBAM) to Moldova and Ukraine and progresses made by Moldova in the European integration process. In particular, EU representatives have reconfirmed the EU support for resuming the Transnistria settlement negotiations in the "5+2" format with the condition to respect the territorial integrity and sovereignty of Moldova. Participants also discussed advantages of consolidating and extending the EUBAM mandate.

Launching of Cooperation Platform of the EU-Moldova Mobility Partnership

The Cooperation Platform of the EU-Moldova Mobility Partnership was launched at a meeting in Chisinau on September 23, with the participation of representatives of the European Commission, EU member states participating in the Mobility Partnership and Moldova’s representatives^[1]. Deputy Minister of Foreign Affairs and European Integration Valeriu Ostalep has outlined Moldova’s priorities within the Mobility Partnership:

• Consolidating relations with the Moldovan community;
• Promoting the reintegration of migrants;
• Strengthening the institutional capacity in the migration management area;
• Ensuring the social protection of nationals working abroad;
• Combating the illegal migration and trafficking in human beings.

In their turn, EU representatives stressed that the migration keeps being a challenge for the EU and a partnership between origin, transit and destination countries is the only way to resolve this problem. At the same time, the launching of Mobility Partnership with Moldova proves the importance of Moldova for the EU, with European officials expressing optimism that the first results of this partnership will be harvested starting 2009.

8^th Meeting of the EU-Moldova Cooperation Subcommittee 3 on Customs, Cross-Border Cooperation, Money Laundering, Drugs, Illegal Migration

On September 24, 2008 Chisinau hosted the 8^th Meeting of the EU-Moldovan Cooperation Subcommittee 3 on Customs, Cross-Border Cooperation, Money Laundering, Drugs and Illegal Migration. The talks of the parties focussed on progress made by Moldova in areas which rest with the competence of the subcommittee: the rule of law, human rights and fundamental freedoms, anti-corruption fight, migration and asylum, border management including cooperation with EUBAM, implementation of the visa facilitation and readmission agreements, fight against organised crime, cooperation in the area of justice and police (according to press releases by MFAEI).

Launching of TWINNING project

The first TWINNING project between the European Commission and the Republic of Moldova was released in Chisinau on September 17, with the Moldovan Parliament as beneficiary^[2]. The project on Support to the Parliament of the Republic of Moldova aims to help consolidating the democracy and the rule of law in Moldova, adjust the Moldovan legislation, norms and standards to EU norms, and strengthen the role of the Moldovan Parliament in the legislative process. The project funded by the European Commission has a one-million-euro budget, a two-year term and will be implemented jointly with the Parliaments of France, Hungary and Moldova. It plans training courses, seminars, workshops and study visits grouped into four components: 1) supporting the reorganisation of the Parliament apparatus; 2) strengthening the capacity of the Parliament to harmonise the Moldovan legislation with EU regulations; 3) assessing the impact of regulations; 4) consolidating the parliamentary control on the Government.

Bilateral cooperation

Republic of Moldova – Italy

During September 28–30, Deputy Minister of Foreign Affairs and European Integration Valeriu Ostalep was on an official visit to Italy. During meetings with Italian officials the Moldovan deputy minister has tackled issues relating to the need to develop and intensify Moldovan-Italian cooperation in the political, commercial-economic, social and security fields; Moldova’s position regarding the future Moldovan-community legal agreement and key areas of cooperation with the EU which raise a major interest of Moldova; situation of Moldovan migrants in Italy. In particular, the sides stressed the necessity to sign Social Security Agreements, intensify cooperation between Interior Ministries of the two states, developing bilateral commercial-economic cooperation via the Chamber of Commerce and Industry of Moldova, efficiently implementing the visa facilitation agreement between Moldova and EU, including through the future Italian Embassy in Chisinau. The Moldovan delegation sought Italy’s support to get a mandate of negotiations on the new agreement between Moldova and EU by the end of 2008.

New foreign ambassadors in Chisinau

On September 24, 2008 Moldovan President Moldova Vladimir Voronin received credentials of foreign ambassadors to Moldova as follows:

• Extraordinary and Plenipotentiary Ambassador of USA, Asif J. Chaudhry;
• Extraordinary and Plenipotentiary Ambassador of Norway, Oystein Hovdkinn;
• Extraordinary and Plenipotentiary Ambassador of Belgium, Leo D’aes;
• Extraordinary and Plenipotentiary Ambassador of the People’s Republic of China, Longzhuang;
• Extraordinary and Plenipotentiary Ambassador of Israel, Avraham Sharon;
• Extraordinary and Plenipotentiary Ambassador of Syria, Dr. Walid Ali Othman;
• Extraordinary and Plenipotentiary Ambassador of Korea, Park Ro-byug;
• Extraordinary and Plenipotentiary Ambassador of Cuba, Felix Leon Carballo;
• Extraordinary and Plenipotentiary Ambassador of Finland, Irmeli Mustonen.

Multilateral cooperation

Republic of Moldova – Council of Europe

ECHR decisions

The European Court of Human Rights has decided on cases Salinschi vs. Moldova and Prepelita vs. Moldova in the period concerned. In the first case, Salinschi has invoked the violation of Article 6 (1) of the Convention (right to a fair trial) and Article 1 of Protocol 1 to the Convention (protection of property). The Court ascertained that the applicant did not use all internal ways to appeal and turned down his application. In the second case, the Court has established the violation of Article 6 (1) of ECHR and Article 1 of Protocol 1 to ECHR, as a judicial decision which awarded victory to the applicant nine years ago was not executed. The Court ordered Moldova to transfer to the applicant the home and field claimed for 3 years or to pay 25,000 euro compensation. In addition, the Court ordered pecuniary damages worth 8,700 Euros for the applicant.

Republic of Moldova – SEECP

On September 26, Chisinau hosted the Meeting of Political Directors of the South East European Cooperation Process (SEECP) organised under the auspices of the Moldovan SEECP Presidency. The meeting discussed latest political developments in the South East European area, progresses made in the process of regional cooperation and consolidation of cooperation between SEECP and Regional Cooperation Council (RCC), presented priorities and calendar of events within the Moldovan SEECP Presidency. A joint sitting of the SEECP Political Directors and Directors of European Affairs was organised at the end of the meeting.

Republic of Moldova – United Nations

On September 29, 2008, Moldovan Deputy Premier Andrei Stratan, Minister of Foreign Affairs and European Integration, attended the 63^rd session of the United Nations General Assembly. He addressed the meeting and expressed Moldova’s position regarding issues from the agenda, in particular, the U.N. role in managing world problems (economic, political and security), settlement of conflicts in various areas of the world, including Transnistria, risk of international terrorism, consequences of changing climate (according to press releases by MFAEI).

² TWINNING is an EU concept initially aimed to help candidate states to get the skills and experience needed to adopt, implement and apply the EU legislation. Starting 2006, this assistance mechanism was made available to member states of the European Neighbourhood Policy.

Studies, Analyses, Comments

Dynamic of economy: truth or challenge?
Iurie Gotisan, 30 September 2008

The 5.4-percent economic growth for the 1st semester (GDP rose by 6.2 percent in the 2nd quarter of 2008) is surprising, though it slowed down much in the last two years

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