2. Moldova: in the grey zone of Europe
BSSB.BE the-american-interest.com 15.03.2018
Danube Europe Ex-USSR Moldova
*Moldova is caught between East and West—yet increasingly serving
Another key security challenge for Moldova is centered on the energy sector. As Candu, the Moldovan speaker of Parliament, stated, “Energy security is the most costly [kind] to achieve and it is the most geopolitically influenced.”
Today Moldova is nearly wholly dependent on Russian gas imports via the pipeline system through Ukraine.
Gazprom is the majority shareholder of the country’s national gas supply, transmission, and distribution company, Moldovagaz, which is unlikely to welcome the diversification of Moldova’s imports away from Russian gas. Nonetheless, spurred by the European Union’s Third Energy Package regulation, Moldova plans to “unbundle” the ownership of its gas and electricity providers and distributors by 2020, which will have direct implications for Gazprom’s assets.
The interconnective Iasi-Ungheni pipeline between Romania and Moldova’s border has been completed, and its expansion to Chisinau by late 2018 or 2019 would enable Moldova’s diversification efforts. The interconnection is also crucial to ensure Moldova’s supply in the case that Russia stops gas transit via Ukraine by late 2019, as Gazprom has threatened, and in light of Gazprom’s current efforts to cancel all gas contracts with Ukraine’s Naftogaz.
- Moldova also bears the burden and risk of the $6 billion gas debt that Transnistria has run up with Gazprom, which provides the breakaway region with “free”
- Gazprom’s leverage of gas debts has been part of its long-standing acquisition strategy.
- In addition to acquiring shares of Maldovagaz in exchange for writing off portions of Moldova’s earlier gas debts, Gazprom has resorted to the same tactics in Belarus, Armenia, and Ukraine to acquire energy infrastructure by extortion. In the case of Kyiv, the write-off of Ukraine’s gas debt in 1997 was used to negotiate Russia’s 20-year lease of the Sevastopol naval base and other nearby facilities, which later facilitated Moscow’s takeover of Crimea.
Since Moldova signed an association agreement with the European Union in 2014, the country has been trying to implement reforms. Its proximity to Romania—with whom Moldova shares a language, culture, religious tradition, and even a history as a common country until the 1940 Soviet occupation—is a great advantage for Moldova’s European hopes.
At the same time, economic underdevelopment persists and Moldova remains one of Europe’s poorest countries, with an annual GDP per capita of $1,900 in 2016. On a positive note, as the Atlantic Council economist Anders Aslund noted at the conference, Moldova’s macroeconomic conditions have stabilized with help from the IMF.
Today the country benefits from Moody’s “stable economy” rating. But to achieve economic growth, as Aslund argued, Moldova needs to raise exports (which should be easier with the EU Association Agreement) and boost investment (which will depend on strong property rights and thus judicial reforms).
Economic growth and judicial reforms are greatly dependent on the country’s ability to tackle its severe corruption problem. For instance, the authorities have still not concluded the case regarding the disappearance of approximately $1 billion from the country’s banks in 2014, which amounted to an eighth of the entire Moldovan economy.
This November or December, Moldova’s Parliamentary elections will highlight the fissures of the country, but will also be a critical opportunity for the nation to determine its future path.
The current pro-EU government led by the Democratic Party of Moldova will be challenged by the pro-EU opposition parties of Action and Solidarity, led by Maia Sandu, and Dignity and Truth, led by Andrei Nastase, in addition to the Russia-friendly Party of the Socialists, whose leader Igor Dodon was elected President in 2016.
How Moldova will tackle its security, energy policy, economic growth, and corruption challenges will largely depend on who will win the election. Whether the country will remain in Europe’s grey zone, a captive nation of the 21st century, will depend not only on Washington and Brussels’s engagement and their willingness to stand up to Russia, but also on Chisinau’s self-captivity to corruption and stagnation.
- The publication is not an editorial. It reflects solely the point of view and argumentation of the author. The publication is presented in the presentation. Start in the previous issue. The original is available at: the-american-interest.com