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Activity of Public Institutions

Parliament
Government
Presidency

A compromised "renovation" manoeuvre by Maxim Kuzovlev

Activity of Public Institutions

Parliament

Note by ADEPT: The Parliament failed again on June 3, 2009 to elect a President of the Republic of Moldova and, therefore, at the request of the incumbent chief of state, the Constitutional Court established the requisite conditions justifying the dissolution of the 16^th Legislature elected in the general elections on April 5, 2009.

1.1. Appointments. Dismissals

The Parliament has made a decision to relieve from office certain legislators upon their demands:

• Dorin CHIRTOACA, Nistor GROZAVU, Valeriu NEMERENCO, Mihail MOLDOVANU, elected on behalf of the Liberal Party;
• Mihail RUSU, elected on behalf of the Party of Communists of the Republic of Moldova;
• Iurie TAP, elected on behalf of the Liberal Democratic Party of Moldova.

Marian LUPU, lawmaker representing the PCRM, former chairman of the Parliament, said on June 10, 2009 that he leaves the Party of Communists and the PCRM parliamentary faction. Lupu released a statement in which he explained his actions and assured that he is decided to keep "participating actively in the Moldovan political process."

1.2. Legislative acts

Law enabling the Government to issue ordinances. Before the validation of elections for a new Parliament, the Government was enabled to issue ordinances in the following areas: energy, veterinary, phyrosanitary, food and healthcare security; implementation of state policy on development of national economy; entrepreneurial activity, including external economic activity.

Law on the modification of the Election Code. Under amendments, the electoral threshold for political parties was reduced from 6 percent down to 5 percent. As well, the turnout for the validation of parliamentary elections was reduced from 1/2 down to 1/3 of the number of electors registered on voters rolls. The turnout for repeat elections was cancelled, so that elections will be validated regardless of the turnout.

Law concerning the enforcement of Article 76 (3) of the Election Code. Under the law, in case of early parliamentary elections organised after the dissolution of the Parliament because of the failure to elect a President of Moldova, Article 76 (3) of the Election Code will be enacted so that to reduce proportionally the terms for organising and holding early elections. The coefficient of proportional reduction of terms will be set by dividing the digit "60" to the number of days left before the enforcement of the decree and the Election Day. The Central Electoral Commission will apply this coefficient to reduce the terms for the implementation of actions stipulated by the schedule of procedures to be fulfilled for the early elections.

Law concerning the modification and completion of some legislative acts (on financial institutions). Regulations concerning the forced liquidation of banks were introduced and it was established that the lawsuits on liquidation of banks in connection with insolvency filled after February 15, 2002 but before the enforcement of this law will be settled in compliance with the law in force when the cases were filled.

Laws on the ratification of some international acts:

• The agreement concerning the supplementary funding of the credit agreement for development (Energy Project II) between the Republic of Moldova and the International Association for Development;
• The Agreement between the Republic of Moldova and International Association for Development concerning the supplementary funding to the Social Investment Fund Project II.

Decision on granting a vote of confidence to the action programme and entire list of the Government. Unlike other documents of this kind, the new programme of the provisory Government does not have a name, a general motto and is not structured into distinct general chapters, while the preamble contains a series of political and propagandistic suppositions. The priorities of the programme envisage:

• The state based on the rule of law;
• The integration into the EU;
• The Transnistrian settlement;
• The revival of economy;
• The maintenance of social policy;
• The sustenance of the youth.

Note by ADEPT: Only the PCRM legislators except for the former speaker of the Parliament who did not attend the plenary sitting concerned voted the list and the Government’s action programme. The parliamentary factions representing the AMN, PLDM and PL released statements criticising the Programme of the Greceanii Government II, describing it as an "electoral manifesto", "free topic essay", strategy to flatter electors".

Government

2.1. Appointments. Dismissals

The temporary Government invested on June 10, 2009 is made of the former members, except for Minister of Local Public Administration Valentin Guznac who was succeeded by Iacov Timciuc, former Moldovan ambassador to China and former minister of energy (in the cabinet ruled by Vasile Tarlev). Mihail Barbulat, former Moldovan ambassador to Turkey and former head of the presidential protocol service (in 2001–2005), was nominated minister of culture and tourism, an office which was vacant for quite a long time.

Mr. Andrei Gurin was relieved from the office of director-general of the Agro-Industrial Agency Moldova-Vin upon his demand.

2.2. Sittings. Decisions

Package of anti-crisis initiatives

Prime minister has told a news conference aimed to introduce the action programme of the provisory Government that the executive will table a set of initiatives to sustain the national economy and maintain the macroeconomic stability of the country, among them:

• The reduction of terms for the issuance of building authorisations;
• The submission of a package of legislative initiatives on protection of competition;
• The state participation in investing in infrastructure;
• The reduction of the state budget expenses and incomes by about 20 percent and the rise of the budgetary deficit by about 5 percent.
• The implementation of the second round of the law on social aid, which will increase the number of people who benefit by state aid every month etc.

Presidency

3.1. Decrees

The outgoing chief of state issued the decree on appointment of the Government on June 10.

On June 15, the outgoing Moldova’s President issued the decree on dissolution of the Parliament and set the early parliamentary elections for July 29, 2009.

On June 16, shortly after the Government has got a vote of confidence and was invested, the outgoing chief of state issued a decree on assignment of Mr. Iurie Rosca as deputy prime minister. Rosca will be in charge with coordinating security and law enforcement institutions.

Decrees on appointment or recalling of certain ambassadors:

• Valeriu Bobutac was assigned Extraordinary and Plenipotentiary Ambassador of the Republic of Moldova to Belarus;
• Lidia Gutu was appointed Extraordinary and Plenipotentiary Ambassador of the Republic of Moldova to Bulgaria;
• Boris Gamurari was recalled from the office of Extraordinary and Plenipotentiary Ambassador of the Republic of Moldova to Poland;
• Iacov Timciuc was recalled from the office of Extraordinary and Plenipotentiary Ambassador of the Republic of Moldova to China and Korea.

Under a presidential decree, Sergiu Burduja, director of the Centre for Combating Economic Crimes and Corruption, was awarded the special ranking of major-general.

3.2. Sittings. Decisions. Statements

Visit to CCECC

The outgoing Moldova’s President has visited the Centre for Combating Economic Crimes and Corruption (CCECC), as it turned 7. Vladimir Voronin praised the CCECC for being efficient against economic crimes and corruption and thus, proving the reason for the decision to build this institution. He stressed the increasing importance of the CCECC role in the current economic conditions related to the global recession, and instructed the institution to mobilise efforts and resources in order to prevent, discover, investigate and stop economic-financial and fiscal contraventions and crimes; combat the corruption and protectionism; prevent and combat the money-laundering; make an anti-corruption survey of draft legislative and normative acts. In this context, Voronin revealed the importance of widely applying modern technologies for CCECC work, so that to modernise this institution and make it capable to handle current challenges.

Visit to ULIM

Vladimir Voronin has visited the Free International University of Moldova (ULIM) and discussed with students diverse current problems and opportunities provided to young people to use their skills and knowledge, get involved into the social-political life of the country. While addressing students, the chief of state stressed the importance of the dialogue, which developed much within the Youth Year, aimed to identify problems faced by students and solutions to resolve them. The president underlined efforts of the state administration to maintain and use the social-economic development basis collected in the last eight years and noted the negative impact of the global recession, difficult political situation in Moldova. Voronin regretted the failure to reach a political consensus with the opposition forces and promised that the ruling party will do its best to maintain a stable political-economic situation in country. Following talks with the chief of state, the ULIM Student Senate tabled some initiatives aimed to improve the education process in this institution of higher learning in particular and education system in general:

• To organise the admission in institutions of higher learning on the basis of a selective contest;
• To introduce an admission rate for the 1^st university level by accepting just dossiers rated not less than "6.5";
• To employ just young lecturers who hold master’s degrees;
• To introduce the master’s degree for all holders of bachelor’s degree;
• To adopt a long-term national programme aimed to sustain young families and permanently improve the demographic situation;
• To work out a strategic promotion and sustenance programme aimed to motivate young people to come back and help developing their native areas.

Economic Policies

1. Macroeconomics

Year 2009 – gravest economic recession in Moldova’s history?..

National Bureau of Statistics (NBS) has recently published statistics on evolution of GDP in the 1st quarter of 2009, which revealed a fall of about 7 percent. Anyway, 2009 will certainly be the year of the deepest economic recession after 1991, shall similar economic trends be further recorded (inclusively at the end of this year) or the least will follow the same way like in the 1^st quarter. An almost similar fall of the Gross Domestic Product (by 6.5 percent) was recorded in 1998, the year of the financial default in Russia, which seriously hit Moldova as well. Almost all economic indicators except for agriculture (+3 percent) have declined much, being particularly influenced by two factors. The first is the fall of internal consumption demand, both of private and public (governmental) consumption and the second one is the dramatic fall of the demand for Moldovan exports, or the external trade of the country counts for more than 140 percent of GDP.

The industry recession, by 24 percent, hit the GDP the most. But the dramatic decline of building sector by more than 30 percent had the most serious impact. However, there is no connection between the economic crisis and the political crisis faced by Moldova, the way other economists said, as the economic crisis began long before the political crisis. Perhaps, the decline would not have been so serious, should authorities got involved in the due time and were not concerned with other problems but economic.

At the same time, the report released in early June by the British Group EIU described a worse situation for Moldova than in March 2009, while it covers the developments from April, in particular the economic and social trends of the country. The report presents a situation like the one described by NBS recently. Almost all economic indicators are on the decline, both imports and exports have decreased much because of the consumption, and therefore, lower collections go to the budget; remittances have decreased much, the productive sector which already faces a very difficult condition is "folded" by the appreciation of the leu versus dollar, and this hardens more the promotion of products on foreign markets, while the external and internal debts have increased much, with the rise of the first being linked to debts of the private sector, and this situation could make the country incapable to pay external debts.

2. Inflation and prices

Inflation is not a problem for the time being…

An inflation rate of 0.2 percent was recorded for April 2009, while a deflation was recorded for the first five months of the year (-1.5 percent) see Diagram 1. Apparently, the inflation does not give headaches, as Moldova recorded deflation for the first five months of the year, but there is a simple explanation – the consumption has decreased much, and therefore, prices did not grow. But the satisfaction of decreasing prices has a short term, and it could turn into discontentment on a long term, since enterprises reduce/stop making production or even become insolvent and/or shut down.

This situation fuelled by the fall of people’s incomes in Moldova reduces the revenues of the national public budget (state, social and health insurance) and wages of population. Even more, customs fees covered about 70 percent of the state budget incomes at least in 2007–2008. Imports decreased by more than 28 percent in the 1^st quarter of 2009, as well as customs fees. Therefore, everybody suffered the consequences: employees of the private sector and public sector, retirees, invalids, students and even businesses, which provide goods/works/services to the state. Public investments in roads, current and capital repair, constructions, equipment etc. are also on the decline or even ceased.

Diagram 1. Dynamic of key economic indicators, annual values in percent



Source: NBS

3. Public funds

Of course, the main challenge for the Government the next months will be revising or even reducing public expenses and state debt when the population is angry with social disparities and worries about effects of the economic crisis. The Government will face difficulties to fulfil social commitments. It is well-known that the unemployment rate is on the rise (and directly hits the budget), while some signals in the banking sector made many people withdraw their savings, and the financial system runs the risk of a liquidity crisis despite statements of authorities; external deficits are on the rise and they are very expensive, with Moldova being a "suspect on duty" in terms of non-sustainability of deficits. Budgetary collections for the first three months award victory to those who signalled unrealistic premises in elaboration of the public budget for this year and failure to reach the deficit target of 1–1.5 percent of GDP, especially because the effects of the crisis are just underway.

4. Banking sector

Legislative amendments…

Before being dissolved, the Parliament has approved amendments to the Law on Financial Institutions and law on guaranteeing of deposits of individuals. The amendments are likely welcome, as they would give fuel to thoughts of majority of domestic bank players to be very cautious when they contract credits or get involved in risky investment projects which endanger the assets of banks (as well as liabilities made of people’s savings implicitly), decisions which are often made consciously without resorting to an ample research on market or depending on the case.

An interesting approach is the introduction of a new chapter, "Chapter VI (1). Forced liquidation of the bank." However, it seems that this chapter contradicts the organic regulations of the law on insolvency. Even more, Article 38(1) of this chapter stipulates the nomination of a liquidator on behalf of an individual in order to apply all legal measures to liquidate the institution and administrate its assets. It seems at a first glance that this is a tool capable to eliminate any corporate or clan interests, but on the other hand supposing the way they will be interpreted is very hard and it is uncertain that an individual will not play the group game or protect some corporate interests, though the new amendments stipulate express the incompatibility of these actions with the tasks of the liquidator.

However, the emergent modification of the law on financial institutions and law on guaranteeing of deposits of individuals, as well as the increased state intervention power is a clear signal that the situation is worsening in general, not only in banking sector.

Transdnistrian Problem

Speaker Shevchyuk loses to Smirnov

The Bender-based newspaper "Novaya Gazeta" has published an analysis regarding the conflict between the legislative and executive branches from Transnistria related to the revision of the constitution. According to the newspaper, the "initiative of the 17" members of the Supreme Soviet which seeks the revision of the constitution has failed. The pressures by Transnistrian leader Igor Smirnov and his acolytes from the media and public organisations made the lawmakers retreat. On May 27, 2009 the initiative group for the modification of the Transnistrian constitution handed in an appeal to speaker Evgeni Shevchyuk, asking him to withdraw the initiative concerned. In his turn, Shevchyuk gratified them for "proving wisdom and civic position," but stressed that "the time will hit the nail on the head." In the context, "Novaya Gazeta" notes that the majority faction of the "Obnovlenye" Party in the Supreme Soviet did not dare to step in the opposition against Smirnov, willing to defeat Smirnov’s clan at the next presidential elections with palliative measures and statements such as "adjustment of the Transnistrian legislation to the Russian Federation’s". By behaving like a coward, the Supreme Soviet led by Shevchyuk has exposed itself and could be dissolved, while its head runs the risk to lose support at the next presidential elections in the region.

Investment forum in Transnistria

During June 4–5, Tiraspol hosted the first investment forum in Transnistria organised by the chamber of commerce and industry from the region. The forum considered 92 projects aimed to attract investments worth 700 million dollars. According to organisers, potential investors gave green light to 33 initiatives capable to attract investments worth 242 million dollars. The private sector has succeeded to attract 60 percent of eventual investments. The investment attractions included among others the Hydro-power Plant in Dubasari and the Power Plant in Dnestrovsk. Seventy out of more than 300 participants in the forum represented 12 countries.

The need of investments in Transnistria’s economy becomes clear on background of the economic-financial crisis which seriously hit the region. Transnistria’s GDP has decreased by 9.3 percent in the 1^st quarter of 2009, while the industrial production has fallen by 30.4 percent. Overall, 178 enterprises have reduced the production volume, of them 21 did not resume the production process in general. The chemical industry has reduced the production volume by 71.7 percent, electro-technical industry by 65.4 percent, engineering industry by 65.1 percent, metallurgical industry by 61 percent, and light industry by 42.3 percent. On the other hand, the electricity production has grown by 21.7 percent and housing opening by about 70 percent.

Note by ADEPT: The investment forum in Transnistria took place on background of a political crisis following the conflict between the legislative and executive branches in connection with constitutional amendments and redistribution of tasks. As well, two businessmen from the region were killed prior and on the days of the investment forum and the head of the "investment policy" department of the Transnistrian ministry of economy was the victim of an attempt.

Foreign Affairs

European Integration

Conclusions of the EU General Affairs and External Relations Council (GAERC) on Moldova

On June 15 in Luxemburg, the General Affairs and External Relations Council adopted the Conclusions on the Republic of Moldova that confirms the commitment of the European Union to further deepening the relationship with the Republic of Moldova, inclusively by adopting the directives for the negotiation of a new EU-Moldova agreement instead of the expired Partnership and Cooperation Agreement (PCA), and stresses the importance of a respect for democratic values and principles by Moldova for a further strengthening of the EU-Moldova dialogue. The GAERC Conclusions could be summarized as follows:

• EU recall its strong commitment to further deepening the relationship with Moldova, on the basis of shared values and principles, inclusively within the framework of the Eastern Partnership, and adopts the directives for the negotiation of a new EU-Moldova agreement. The negotiations will start as soon as circumstances allow and after the Republic of Moldova will ensure an equal treatment to all EU citizens and will respect the principle of good-neighborly relations;
• EU will offer the Republic of Moldova an enhanced support for further political and economic reforms, aimed at strengthening democracy and good governance, the rule law, freedom of the media and respect for human rights and fundamental freedoms. In this regard, a comprehensive package for democracy support will be launched;
• Council expresses concern over the human rights abuses that took place after the 5 April parliamentary elections in the Republic of Moldova and the deterioration of freedom of expression and media. The Council calls for a transparent, impartial and effective investigation of the human rights violations, as well as the events around 7 April, through a process that includes the opposition and international experts, and urges the Republic of Moldova to ensure equal access of political parties to the public media, to ensure transparent allocation of media licenses and to refrain from the use of administrative pressure against independent media, civil society organizations and political parties;
• Council underlines the need for constructive political dialogue in the existent political situation in the Republic of Moldova and urges the Moldovan authorities to ensure the free and fair conduct of the early parliamentary elections, including through cooperation with OSCE/ODIHR and the Venice Commission of the Council of Europe;
• Council stresses the importance of fully observing the principles of independence, sovereignty and territorial integrity of the Republic of Moldova, and calls for the resumption of negotiations in the 5+2 framework as soon as possible.

Note by ADEPT: The Moldovan authorities were reserved over these conclusions, presenting to the public in a communication by MFAEI just some excerpts from these conclusions, with most of them being neutral, and noting that they will consider the EU opinion regarding the unpublished issues.

Sitting of the Moldova-EU communication Subcommittee on Energy, Transport and Telecommunication, Science and Technology, Training and Education

During June 9–11, Chisinau hosted an ordinary sitting of the Moldova-EU Communication Subcommittee on Energy, Transport and Telecommunication, Science and Technology, Training and Education, which considered latest developments in Moldova in the sectors concerned (transport, information society, environment, healthcare, energy, education, culture, media, research, etc.) in the framework of EUMAP-related commitments. The sitting also discussed further cooperation possibilities, inclusively within regional initiatives and EU assistance relating to the linking of Moldova to the Central Traffic Axis; cooperation with the European Aviation Safety Agency and the eventual accession of Moldova to the European Common Aviation Area; signing of the Danube Agreement and Moldova’s cooperation within the DABLAS Task Force; gradual convergence of the natural gas and electricity market to EU principles; continuation of negotiations on Moldova’s accession to the Energy Community Treaty etc. (according to a MFAEI communication)

Bilateral cooperation

Republic of Moldova – Romania

Diplomatic relations between the Republic of Moldova and Romania are frozen so far; ambassadorial offices of both countries are vacant, while the visa requirements for Romanian citizens are effective in continuation. However, both parties formally declare interest to normalise the Moldovan-Romanian relations. But both Moldova and Romania condition the restoration of good relations. According to Moldovan Prime Minister Zinaida Grecianii, the visa requirements for Romanians will be cancelled should Romania sign the border recognition treaty and the small border traffic convention^[1]. Further, Moldova urged Romania to facilitate the visa issuance for Moldovan citizens by cancelling the requirements to hold a 500-Euro bank account^[2]. On the other hand, a Romanian public TV channel has quoted Romania’s president as saying that "the Moldova-Romania relations will normalise when the Republic of Moldova will have politicians to advantage the people."^[3]

Another reason to fuel the exchange of contradictory statements between Moldovan and Romanian authorities was the statement delivered by Romanian Foreign Minister Cristian Diaconescu at the June 15, 2009 meeting of the General Affairs and External Relations Council (GAERC), which confirms that requested by Romania, the EU conditioned the opening of negotiations on a new agreement with Moldova with providing an equal visa-related treatment to all citizens of member states, stressing the importance of Moldova’s respect for good neighbourhood relations. In reply, the Moldovan Ministry of Foreign Affairs and European Integration released a communication to accuse Romania of violating the good neighbourhood principle by meddling systematically into Moldova’s interior affairs and complicating the visa issuance for Moldovan citizens by requiring them to hold a 500-euro bank account.

Republic of Moldova – Russia

The Moldova-Russia relations have a positive evolution. While diplomatic relations are developing well, there are some positive economic signals. In particular, on June 1 the Russian sanitary service (Rospotrebnadzor) released a declaration concerning the import and sale of the spirits made in the Republic of Moldova, saying that it is considering possibilities to simplify the expertise of wine production for some wine enterprises from Moldova.

Republic of Moldova – US

Incumbent President Vladimir Voronin received a message from US Secretary of State Hillary Rodham Clinton on June 1, with the latter expressing the US support to development of Moldovan democracy and condemning the violence occurred after the April 5, 2009 parliamentary elections. As well, the US secretary of state stressed the necessity for the Moldovan Government to consider concerns related to the elections and the way the held people, journalists and civil society representatives were treated after the unrest. According to the US secretary of state, a complete explanation to these issues will strengthen the trust in democratic institutions in Moldova. (according to a presidential communication)

Multilateral cooperation

Republic of Moldova – Council of Europe

Visit by Corapporteurs of the Parliamentary Assembly of the Council of Europe (PACE)

PACE Corapporteurs Josette Durrieu and Egidijus Vareikis visited Moldova on June 10 and met representatives of the ruling party, opposition parliamentary parties and non-parliamentary parties, representatives of nongovernmental organisations, diplomatic community and Prosecutor-General Valeriu Gurbulea. The corapporteurs said at the end of the visit that the early parliamentary elections are a very important process for Moldova and invited the authorities to remedy all the problems which gave birth to the post-electoral conflicts such as well-done voters’ rolls and access of all political parties to the public television station "Moldova 1". The PACE corapporteurs emphasised that the CoE will deploy many observers to the next elections and they will be more careful, monitoring both on election day, and all process of organisation and conduct of elections.

Republic of Moldova – SEECP

Chisinau hosted on June 5 the summit of the South East European Cooperation Process (SEECP) which brought together heads of state and government from SEECP member states, preceded by the meeting of SEECP Foreign Minister on June 4. Taking part in the meeting were also representatives of the Czech Chairmanship-in-Office of the EU Council and future Swedish Presidency, European Commission, Secretary-General of the Regional Cooperation Council (RCC).

The meeting of Foreign Ministers tackled issues related to progresses made by the South East European area in the European integration process and discussed ways to strengthen the SEECP role as important political forum in the region and intensify the cooperation with the Regional Cooperation Council (RCC). As well, it approved some important documents: the Report by the Moldovan SEECP Chairmanship-in-Office 2008–2009; the Annual Report by the RCC Secretary-General concerning regional cooperation in South East Europe; the Strategic RCC Work Programme for 2009–2010.

The 12^th summit of the SEECP Heads of State and Government in Chisinau ended Moldova’s SEECP Chairmanship 2008–2009. It considered progresses made by countries in the region in the European integration process, regional cooperation in the period concerned. As well, it discussed possibilities of regional cooperation and political and financial support by the European Union and international financial institutions. The summit adopted the following documents: the Chisinau Political Declaration, the Chisinau Joint Declaration, the Annual report by the RCC Secretary-General concerning the regional cooperation in South East Europe, the Strategic RCC Work Programme for 2009–2010, the Report by the Moldovan SEECP Chairmanship-in-Office 2008–2009. (According to MFAEI communications)

Studies, Analyses, Comments

A compromised "renovation" manoeuvre
Maxim Kuzovlev, 15 June 2009

Members of the Transnistrian parliament who initiated amendments to the Constitution have withdrawn their draft law in late May 2009. The "state commission for developing and improving the Transnistrian Constitution to adjust it to the Russian Federation’s Constitution" was made to advise Igor Smirnov

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