1 – A Moldovan-style oligarchy
BSSB.BE osw.waw.pl 16.06.2016
There have been several significant changes on Moldova’s domestic political scene in the wake of the November 2014 parliamentary elections there. Negotiations lasted nearly two months and resulted in the formation of a minority coalition composed of two groupings: the Liberal-Democratic Party (PLDM) and the Democratic Party (PDM).
New coalition received unofficial support from the Communist Party (PCRM), which had previously been considered an opposition party. Contrary to their initial announcements, PDLM and PDM did not admit the Liberal Party led by Mihai Ghimpu to power. Moreover, they blocked the nomination for prime minister of the incumbent, Iurie Leancă.
Leancă has been perceived by many as an honest politician and a guarantor of reforms. This situation resulted in the political model present in Moldova since 2009 being preserved. In this model the state’s institutions are subordinated to two main oligarch politicians: Vlad Filat (the leader of PLDM) and Vlad Plahotniuc (a billionaire who de facto controls PDM).
- With control over the state in the hands of Filat and Plahotniuc questions are raised regarding the prospects of Moldova’s real modernisation.
- It will also have a negative impact on the process of implementation of Moldova’s Association Agreement with the EU and on other key reforms concerning, for example, the judiciary, the financial sector and the process of de-politicisation of the state’s institutions.
- From both leaders’ perspective, any changes to the current state of affairs would be tantamount to limiting their influence in politics and the economy, which would in turn challenge their business activities.
Despite its instability, the political system which has evolved in Moldova in recent years will be extremely difficult to change. Filat and Plahotniuc, who are competitors both politically and in business, have regularly clashed and this is having a negative impact on the government’s stability and on the entire political scene. Still, both leaders are mainly focused on retaining power. This forces them to devise a modus vivendi within one ruling coalition which practically is tantamount to preserving the current system.
A Moldovan-style oligarchy
A process of subordinating state institutions to the leaders of the parties making up the government coalition began in Moldova upon the Alliance for European Integration assuming power in 2009.
In line with an undisclosed protocol which made up a part of the coalition agreement of 8 August 2009, a ‘party formula’ was established to be used when nominating candidates to major public offices. This formula covered not only the office of the prime minister, the speaker of the parliament and individual ministers, but also those posts which should never be staffed by party-nominated candidates. These include the posts of general prosecutor, the head of the central tax office, the governor of the National Bank of Moldova and the head of the Central Electoral Committee.
A strict division of the areas of influence within state institutions serves the interest of the leaders of the two major coalition parties – Vlad Filat, the leader of PLDM, and Vlad Plahotniuc. Both Filat and Plahotniuc are billionaires who developed their fortunes back in the 1990s, often in dubious circumstances.
From their perspective, control over key state institutions is mainly a method of securing their business dealings and of creating the best possible development conditions for their enterprises.
On the other hand, this control brings them financial benefits, made possible due to their influence over state-owned companies (banks in particular), due to their participation in public tenders and privatisation processes, and to their access to loans and subsidies granted by foreign entities.
Furthermore, they have also used their control over state institutions to maintain their position in power circles. This was clearly visible in the course of parliamentary elections organised in November 2014. By exerting influence on the Central Electoral Committee and the judiciary, the ruling parties managed for example to eliminate one of the main political competitors, the Patria party led by Renato Usati, from the electoral race just three days prior to polling day.
One example of how control of state institutions can be a source of significant financial profits for the leaders of PLDM and PDM is seen in the illegal transfer of over 1 billion euros from three Moldovan banks: Banca de Economii, Banca Sociala and Unibank. Recently, these banks granted multi-million loans to companies associated with Ilan Shor (a Moldovan-Russian businessman), Vlad Filat, and probably also Vlad Plahotniuc.
- A large portion of these loans was considered ‘unpayable’ from the very beginning. As a consequence, since it was impossible to collect the debt, the banks involved in this illegal practice began to rapidly lose financial liquidity.
- To rescue them, in November and December 2014 the National Bank of Moldova (NBM) introduced state supervision of the three banks and decided to launch bail-out programmes amounting to hundreds of millions of euros shifted across from currency reserves.
- This practice would have not been possible without the involvement of the coalition leaders. The NBM, whose task is to supervise financial transfers in the country’s banking sector, must have been aware of the operations of dubious profitability being carried out by these three banks. The reason behind the lack of action to stop this practice and maintain financial liquidity was most probably political. It seems to have been a result of political pressure exerted by Filat and maybe also by Plahotniuc.
This type of oligarchic system is very unstable; this was evident during the final five years of the pro-European coalition’s rule. This instability is based on a paradox. On the one hand, the two main coalition leaders, Filat and Plahotniuc, are one another’s business and political rivals involved in a permanent contest to expand their influence within the current system and to diminish that of their rival.
On the other hand, though, they are interested in maintaining power and preserving the current system. This has forced them to devise a certain modus vivendi to be able to function within one government coalition. Moreover, they do not intend to admit other parties and anti-government politicians to power, since these could make attempts to change the current oligarchic system. For this reason, both Filat and Plahotniuc preferred to build an informal coalition with the Communists (who are interested in preserving the system in order to be present in it) rather than invite liberals or Leancă to power.
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