Romania Lends Moldova a Helping Hand
BSSB.BE neweasterneurope.eu 30.10.2015
Contrary to the policy of the International Monetary Fund (IMF), Romania has decided to financially support the Moldovan government. A Romanian loan of 150 million euros will certainly help considering the current social and political upheaval in Moldova; where a looming financial crisis threatens to worsen the situation. But this move has created some controversy as the current Moldovan government is accused of fraud and theft of a billion US dollars.
The Romanian prime minister, Victor Ponta, announced his government’s financial support for Moldova during the Romanian-Moldovan intergovernmental meeting held on September 22nd 2015 in Constanța. The Romanian parliament, as well as President Klaus Iohannis, quickly approved the plan. However, since the idea appeared it was met with scepticism on the international stage as well as inside Moldova.
Chișinău does not currently enjoy the support of the IMF and the World Bank, which suspended negotiations on a new agreement with Moldova in June 2015. The suspension of the talks was primarily due to Moldova’s problems in the banking sector, dubbed the “theft of the century” (which involved the disappearance of $1 billion dollars from three Moldovan banks late last year) and the dismissal of then-Prime Minister Chiril Gaburici.
The negotiations with the IMF were set to restart in September 2015, but the day before the delegation arrived in Chișinău, the head of the National Bank of Moldova resigned. His resignation was one of the demands of the Dignity and Justice movement which organised massive anti-governmental demonstrations. This move postponed the negotiations.
Yet many commentators claim that the date of the dismissal was not a coincidence. According to some claims, the government in fact did not want to restart the negotiations since the IMF would be pushing for unpopular reforms such as austerity measures. Having in mind the tremendous social dissatisfaction current felt in Moldova, and expressed by the protests which have been taking place for months, unpopular reforms could be a nail in the government’s coffin.
Read also: “A Moldovan Impasse” by Kamil Całus, Centre for Eastern Studies
The lack of support from international financial institutions for Moldova puts the state budget at serious risk. It may simply soon run out of money. This is why the “brotherly aid” from Bucharest is so crucial. On the on hand, it postpones the implementation of harsh reforms and, on the other, helps secure the budget.
Moldova, until recently perceived as a success story of European integration, does not enjoy the same support from the West as it once had. This is directly related to the lack of progress in key reforms, continuing corruption and the “oligarchisation” of the public institutions. The suspension of the financial negotiations by the IMF, the European Union and the World Bank sends a clear signal to Moldovan authorities: “Take proper care of your state or you will not get our help.” Protesters gathering in the heart of Chișinău – both pro-Russian and pro-European – also ask the West to stop financing the current, corrupt government.
By lending Moldova 150 million euros in such a critical moment, Romania is acting against current western policy. This could cause further turbulence in Bucharest’s own relations with the IMF as it is now also in negotiations with it. However, it seems that the geopolitical and electoral factors have prevailed.
In the current social and political impasse in Moldova, pro-Russian forces are on the rise, especially The Socialist Party of Moldova and Our Party. As opposed to the government, these parties enjoy solid popular support. What’s more, as opposed to the loosely organised Dignity and Justice movement, the pro-Russian parties have well-developed structures and political representation.
In the event that the Moldovan parliament is dissolved, a snap parliamentary election in Moldova could likely mean a victory of these pro-Russian political forces. Romania believes its best interest is to maintain the pro-European and pro-Bucharest political elite. Even if this establishment is corrupted, it still is “pro-European”. And for Romania, that is better than having Moldova return to a Russian sphere of influence.
Parliamentary elections will take place next year Romania. Relations with Moldova always play a key role in every election campaign and is an important element for every political party in Romania: from the most active supporters of “brothers from Moldova” to the supporters of the unification of two states, which is usually exploited by the former president, Traian Băsescu.
Despite some negative trends in the polls, Ponta still hopes his Social Democratic Party will be able to hold on to power. His “selfless” help for Moldova is always a good postulate to sell in the pre-election run. Iohanis was the only politician in Romania who could have blocked the loan. He is famous for his anti-populist views so some had expected him to veto the move. What is more, Moldova did not have an important place in Iohanis’s politics. Romanian president likes to present himself as a man of strict rules, including in foreign policy.
This is supposed to differ him from Victor Ponta who is going to face corruption trial. But there is little doubt how negatively Ponta and his colleagues would present Iohanis’s veto to the public, especially since the president’s support decreased recently. One of the main arguments that his critics make is that Iohanis does not care well enough about Romanians living abroad, especially having in mind the Moldovans. Going against the loan would also be an unpleasant signal towards the National Liberal Party which helped Iohanis come to power.
Support for Moldova, and especially for its pro-western path, is an axiom in Romanian foreign policy which is often instrumentally used by many politicians in Romania. This time the axiom caused Romania, supported by geopolitical factors, to go against the mainstream policy of the EU. However, pro-Russian forces gaining power in Moldova would also mean a failure in the EU’s Eastern Partnership. Hence, some claim, it is also in the EU’s best interest to support the pro-European government in Moldova. For the time being, it seems that Bucharest is willing to takes measures that the EU and the IMF are not.
Piotr Oleksy, PhD, is an executive director of the EastWest Analytics agency.
Disclaimer: After the article was written, Romanian Senate ratified the final version of the agreement whereby Romania will grant a loan worth 150 million EUR to the Republic of Moldova under the condition of the success of negotiations between Moldova and the International Monetary Fund. In spite of Victor Ponta’s numerous declarations that the IMF’s negotiations would not influence his decisions. Ponta declared that Moldova needed money first, then reforms. In the end, political pragatism prevailed over populism.
Tagsbillion US dollars financially support on the international stage President Klaus Iohannis Prime Minister Chiril Gaburici Romania Romanian-Moldovan intergovernmental meeting skepticism social and political upheaval in Moldova the International Monetary Fund (IMF) the Moldovan government the Romanian prime minister the “theft of the century” Victor Ponta
The Three Seas Strategy 18.07.2017 | BSSB
Romania buys Moldova’s trust 09.05.2016 | BSSB
1 – Romania. German President – Bad President... 13.04.2016 | BSSB
Unusual trio: Romania, the EU and the USSR... 22.04.2016 | BSSB
Unirea: trick or treat 06.03.2018 | BSSB
Moscow offered Romanian PM to fly to China bypassing Russia... 30.08.2014 | BSSB
AIIB, BRICS and an Emerging World 14.04.2015 | BSSB
Moldova’s Bank Crisis. New Faces 15.03.2016 | BSSB
Ukraine. Between the dream world and reality... 10.01.2018 | BSSB
Italy’s Enel intends to sell the assets in Romania till the end of the yea... 30.08.2014 | BSSB
No Exit 03.07.2015 | BSSB
Europe`s East: mapping out a new geography... 23.03.2017 | BSSB
- 2. Three Seas Initiative in action 23.03.2018
- A Dual Approach to Europe’s Future 23.03.2018
- Global Risks in Turbulent Times 22.03.2018
- 2.The EU as seen from Serbia 22.03.2018
- Intermarium cooperation 21.03.2018
- 1.Three Seas Initiative in action 21.03.2018
- KAPLAN: ‘In Europe’s Shadow’ 20.03.2018
- 1.The EU as seen from Serbia 20.03.2018
- Brzezinski is reading «between the lines» 19.03.2018
- 1. Western Plan for Eastern countries 19.03.2018
- 1. Mysterious Danube identity 16.03.2018
- Why nations fail 16.03.2018
- 2. Moldova: in the grey zone of Europe 15.03.2018
- 1.The ‘Big Lie’ 15.03.2018
- 1. Eastern Voices 14.03.2018