MOLDOVA
Country Brief
The Republic of Moldova: A Country Finding its Post-Soviet Identity
One of the Smallest Economies
The Republic of Moldova is a landlocked country in Eastern Europe with a population of 3,5 million citizens. It borders Romania to the west and Ukraine to the north, east and south. Moldova shares a common cultural heritage with Romania and Romanian (or “Moldovan”) is the official language(1). Russian is spoken by 16% of the population. With a current GDP of £ 8,4 billion (2) and an average gross monthly salary of £ 319 (3), Moldova is the poorest country in Europe. In Moldova, about one third of the population lives abroad at any given time to send cash to families back home. Thus, remittances from abroad account for 15% of the GDP, one of the highest shares worldwide (4).
One Billion Dollars “Stolen”
One recent cause for this large-scale out-migration is the so-called “Grand Theft” in November 2014 (5), when a total of 1 billion US$ disappeared from three of the country’s leading banks through transactions to foreign bank accounts. Moldova’s central bank bailed out the three banks with 870 million US$ in emergency loans, but thousands of people lost savings nevertheless (6). The central bank then hired financial consultants to investigate the fraud.
“The Last Soviet State”
Another reason for Moldova’s mass emigration is the Transnistria conflict, an issue that hampers the country’s long-term socio-economic development (7). Transnistria is a separatist region in the east of the country, located between the Dniester River and the Ukrainian border. It declared its independence from Moldova in September 1990, as the predominantly Russian population felt oppressed by the Moldovan majority (8). The civil war that followed was ended by Russia with a ceasefire agreement in July 1992 and Russian troops remain in Transnistria to this day (9).
The breakaway region subsequently established its own administration and the Moldovan government does not exercise control over the territory. The only entity recognizing it internationally is the Commonwealth of Unrecognized States (10). Transnistria’s goal is to join Russia and the Russian Federation does support the region economically (11). This includes low-priced energy supply for example (12). Just like Transnistria, Moldova depends on Russian gas exports as well. In turn, the country exports most of its wine – and migrant workers – to Russia (13).
Where Does Europe’s East Belong?
At the same time, Moldova is part of the EU’s Eastern Partnership policy and signed an association agreement in June 2014. The treaty came into effect in July 2016, aiming at political association (e.g. visa-free travel) and economic integration. The EU’s rationale behind its neighbourhood policy is that more democracy and stability in Eastern Europe may eventually lead to more security and prosperity within the EU (14).
In November 2018, however, the European Commission cut its financial assistance to Moldova by 20 million € for both 2017 and 2018. It also suspended a 100 million-euro macro-financial assistance programme until further notice (15). Johannes Hahn, the EU Neighbourhood Commissioner, said the decision could be reversed, providing that the Moldovan government further addresses issues like the 2014 “Grand Theft” or “the ‘very dubious’ voiding of mayoral elections in the capital which had been won by an anticorruption candidate” (16).
On June 3, 2018, the pro-European candidate Andrei Năstase won the second round of the local election in Moldova’s capital Chisinau. Demanding greater transparency since the banking fraud (17), Nastase rallied more than 52,5% of the votes, defeating his Moscow-friendly opponent Ion Ceban. The Chisinau City Court then invalidated the election result on the grounds of “unlawful ‘agitation’ on election day (18)” by both candidates (19). The decision was upheld by a ruling of Moldova’s Supreme Court in the same month.
Going Beyond the Pro-East, Pro-West Dimension
Many analysts would traditionally perceive such political battles “through the prism of a direct competition between Europe and Russia” (20). According to Cristina Gherasimov, a Research Fellow at the German Council on Foreign Relations, “it is more useful to frame them as a competition between a rules-based system and a power-based system (21)”.
Supporting the same line of argument, one Freedom House report states that “Moldova inherited the Soviet tradition of judicial subordination to the executive power (22)”. With this legacy in mind, the “power-based system” can be seen as “the exercise of influence by ruling elites and businessmen over policy, laws or economic regulations for their personal benefit (23)”. From this perspective, President Maia Sandu’s anti-corruption platform leading up to the presidential election was an effort to strengthen the rules-based system.
After a run-off vote in November 2020, President Sandu won the election. As a former World Bank economist and anti-corruption campaigner, her credentials suggest she can put forward an agenda that benefits the welfare of all Moldovans.
Last updated: June 2021
References
(1) AUSTRALIAN GOVERNMENT: DEPARTMENT OF FOREIGN AFFAIRS AND TRADE, “Moldova country brief”, May 2018, https://dfat.gov.au/geo/moldova/Pages/ moldova-country-brief.aspx, (accessed 15 January 2019).
(2) THE WORLD BANK, “The World Bank in Moldova: Overview”, https:// www.worldbank.org/en/country/moldova/overview#1, (accessed 23 May 2021).
(3) STATISTICA MOLDOVEI, “Average earnings in the IV-th quarter 2020”, https://statistica.gov.md/newsview.php?l=en&idc=168&id=6930, (accessed 23 May 2021).
(4) THE WORLD BANK, “The World Bank in Moldova: Overview”, 11 October 2018, http://www.worldbank.org/en/country/moldova/overview#4, (accessed 15 January 2019).
(5) HOCK, Alexej. “Asylbewerber aus Moldau: Wenigstens ein paar Monate Deutschland“, Die Welt, 3 January 2019, https://www.welt.de/politik/ausland/plus186461170/Asylbewerber-aus-Moldau-Wenigstens-ein-paar-Monate-Deutschland.html, (accessed 15 January 2019).
(6) KOTTASOVA, Ivana. “How to steal $1 billion in three days“, CNN, 7 May 2015, https://money.cnn.com/2015/05/07/news/economy/moldova-stolen-billion/index.html, (accessed 15 January 2019).
(7) DEUTSCH-MOLDAUISCHES FORUM, “Republik Moldau”, date unknown, http://www.deutsch-moldauisches-forum.de/republik-moldau, (accessed 15 January 2019).
(8) DOLL, Nikolaus and Hans EVERT. “Transnistrien: Eine Firma regiert das letzte Stück Sowjetunion“, Die Welt, 20 October 2017, https://www.welt.de/politik/ausland/plus 169795189/Eine-Firma-regiert-das-letzte-Stueck-Sowjetunion.html, (accessed 15 January 2019).
(9) AUSTRALIAN GOVERNMENT: DEPARTMENT OF FOREIGN AFFAIRS AND TRADE. Op. cit.
(10) DOLL, Nikolaus and Hans EVERT. Op. cit.
(11) BBC, “Trans-Dniester profile”, 17 September 2018, https://www.bbc.co.uk/news/world-europe-18284837, (accessed 15 January 2019).
(12) DOLL, Nikolaus and Hans EVERT. Op. cit.
(13) DEUTSCH-MOLDAUISCHES FORUM, op. cit.
(14) GNAUCK, Gerhard and Christoph B. SCHILTZ. “EU und Russland: Wem gehört Europas Osten?“, Die Welt, 24 November 2017, https://www.welt.de/politik/ausland/plus 170947860/Wem-gehoert-Europas-Osten.html, (accessed 15 January 2019).
(15) JOZWIAK, Rikard. “EU Cuts Moldova Funding Amid Rule-Of-Law Concerns“, Radio Free Europe/ Radio Liberty, 15 November 2018, https://www.rferl.org/a/eu-cuts-moldova-funding-amid-rule-of-law-concerns/29603052.html, (accessed 15 January 2019).
(16) Johannes HAHN cited in Rikard JOZWIAK. Op. cit.
(17) TANAS, Alexander. “Moldovans protest after court voids mayoral election result“, Reuters, 21 June 2018, https://uk.reuters.com/article/uk-moldova-protests-mayor/moldovans-protest-after-court-voids-mayoral-election-result-idUKKBN1JH1VJ, (accessed 15 January 2019).
(18) CHISINAU CITY COURT cited in LUCA, Ana Maria. “Moldova Court Backs Mayoral Election Ruling“, Balkan Insight, 25 June 2018, https://balkaninsight.com/2018/06/25/ moldova-supreme-court-backs-rejects-ruling-to-invalidate-mayoral-elections-06-25-2018/, (accessed 15 January 2019).
(19) RADIO FREE EUROPE/ RADIO LIBERTY “Moldovan Supreme Court Upholds Decision To Void Chisinau Mayoral Election Amid Protests”, 25 June 2018, https://www.rferl.org/a/moldovan-supreme-court-upholds-decision-chisinau-mayoral-election-voided-protests/29318960.html, (accessed 15 January 2019).
(20) WORLD POLITICS REVIEW, “Moldova’s Political Divisions Go Beyond the EU-Russia Competition for Influence”, 27 November 2019, https://www.worldpoliticsreview.com/trend-lines/28377/moldova-s-political-divisions-go-beyond-the-eu-russia-competition-for-influence, (accessed 1 February 2020).
(21) Loc. cit.
(22) MISCOIU, Sergiu. “Moldova”, in Sylvana HABDANK-KOLACZKOWSKA and Zselyke CSAKY. (eds.), Nations in Transit 2014: Democratization from Central Europe to Eurasia, (Lanham: Rowman & Littlefield, 2015), p. 442.
(23) HAJDARI, Una. “Moldova’s Failed Revolution Is Not Over Yet“, Foreign Policy, 22 November 2019, https://foreignpolicy.com/2019/11/22/moldova-vladimir-plahotniuc-failed-revolution-not-over-yet/, (accessed 1 February 2020).