Moldova’s Future: East, West, or Somewhere in the Middle?

By Leslie Gibson & Dinu Toderascu

Moldova, located — although often described as “sandwiched” — between Romania and Ukraine, faces a crossroads. It aspires both to be a part of Europe within the EU’s Eastern Partnership, yet feels pressure from Russia and instability due to the Russia-backed separatist area of Transnistria on Moldova’s border with Ukraine. As one of Europe’s poorest countries also wracked by a corruption scandal that led to a bank fraud of one billion dollars, or approximately 12 percent of Moldova’s GDP, Moldova faces an upwards climb in building its economy while simultaneously reforming its political system. Recently, a new electoral law introduced a mixed-electoral system that protestors claim unfairly favors the two largest parties. Both parties — the pro-Russian Socialists and the pro-West Democratic Party — and their leaders are accused of lacking accountability and transparency.

As part of its ongoing efforts to further push the dialogue on a comprehensive and sustained approach of the Euro-Atlantic community to the Black Sea region, and in light of the recent evolutions in Moldova, The German Marshall Fund of the United States (GMF) and its local partner, the Foreign Policy Association (APE), organized a study tour to Moldova on October 1–4, 2017. A delegation of ten, comprised of EU and U.S. decision-makers, experts, and journalists, met with senior government officials, opposition leaders, civil society activists, journalists, as well as international organizations and foreign embassies on the ground.

GMF asked four participants about their observations in Moldova during the recent study tour.

GMF: Why should what’s happening in Moldova be on our radar?

Tim Judah, Special Correspondent, The Economist: Moldova is the most under-reported and neglected country in Europe — but important things are happening there, which have ramifications for all of us in the rest of Europe and so anything that GMF can do there is to be welcomed. 

Paige Alexander, Executive Director, European Cooperative for Rural Development (EUCORD); and former Assistant Administrator, Europe and Eurasia, USAID: I wouldn’t go as far to say, “what happens in Moldova will affect the rest of the region” but the backsliding is worrisome. As the poorest country in Europe, with almost 10 percent of its population working in Russia, the question remains which way will Moldova look. In our trip, we spoke to politicians, opposition leaders, and policy pundits who question which way the country is going, East or West. Although verbiage has been given to their westward attention, it became clear that not everyone is invested in the country’s future being in lock step with Europe. The more exposure Moldovans have, and Europeans have, to each other, the clearer the path should be.

Amanda Paul, Senior Policy Analyst, European Policy Center: A key goal of the Eastern Partnership (EaP) and the European Neighborhood Policy (ENP) is creating a more stable, secure and predictable region, and more recently, as outlined in the EU Global Strategy, resilient neighbors — meaning they do not export instability and other problems into the EU. In this sense a corrupt and undemocratic Moldova stagnating or moving backwards is not in the EU’s interests. More so because Moldova is right on the EU’s doorstep. It is also widely understood that a withdrawal of the EU support would leave the door wide open for Russia. This could be very detrimental for Moldova and also the broader neighborhood, particularly Ukraine. Like Ukraine, Moldova has become part of a geostrategic competition between Brussels and Moscow, with Russia determined not to let the country slip away from its influence.

The EU has committed a lot of resources and efforts to supporting Moldova but was left with egg on its face after promoting Moldova as the “star pupil” and “leader” in the Eastern Partnership (EaP) only for the biggest corruption scandal in the history of the country to erupt. It damaged the image of the EU and in large part this led to the election of the pro-Russian president, Igor Dodon. Therefore the EU needs to show that it has learned its lesson and expects real commitment from partners. EU funding is very important to Moldova and it should be used as leverage for serious reform or otherwise withheld or redirected towards Moldovan civil society and journalists whose work is becoming increasingly difficult as independent media space is being reduced by the big cat politicians. Furthermore the EU should look for ways to support ordinary Moldovans who have to live in very difficult circumstances.

Alena Kudzko, Deputy Research Director, GLOBSEC Policy Institute: With multiple crises developing on the European continent and across the world, the EU has arguably more important issues to worry about than a small country of three million people and no active military conflict. But paradoxically, EU’s success and credibility might depend on Moldova’s transformation.

For years, Moldova was perceived as a frontrunner of reform and political and economic transformation. Moldova was the favorite and most promising project in Eastern Europe, and donors were rather generous with aid to support the country’s development. The exposure of the banking fraud altered the image of the country from the frontrunner of democratic transformation into a quagmire of corruption. The change did not happen overnight however. Some observers and reformers overlooked the backsliding and focused on the areas of the remarkable progress the country had made. Others realized that the reforms were often too fragile or superficial but hoped for the better — given the political and financial support provided to the country, it was too distressing to admit that the outcomes did not live up to the promise.

The Moldovan stalemate with reforms is alarming not only for its citizens but also for Moldova’s Western partners. The small compact country bordering the EU, albeit not without challenges, was an as-good-as-it-gets opportunity to create a precedence of sustainable transformation spurred by EU-style reforms. Not such a long time ago many in the EU and outside it believed in the EU’s potential to transform the world in its image and be the normalizing power. But if with all the invested effort and resources the EU cannot transform or influence Moldova, how high could the expectations be for a success elsewhere?

GMF: How would you assess Moldova’s political, economic, and social situation?

Amanda Paul: The current situation in Moldova is worrying. The fact that the EU has held back funds, most recently cutting the budget support program for justice reforms due an insufficient commitment to reforms demonstrates the level of concern. Moldova’s leadership needs to demonstrate its commitment to democracy and the rule of law. They need to match their rhetoric of reform and combating corruption with serious deeds. So far there is little sign of this. The changes adopted by the Moldovan Parliament related to the electoral system on July 20, 2017 are not a positive development as these make the system more vulnerable to undue influence by vested interests. The opinion of many both inside and outside of the country that Moldova is run by one oligarch who controls everything one way or another is a very bad sign. The current situation in the country negatively impacts the economy and the social situation. This is reflected by continuous outpouring of Moldovan citizens, in particular, which creates problems not only in terms of the brain drain but also in terms of finding low-skilled workers.

Tim Judah: For the last quarter of a century things have been bad in Moldova. They fluctuate of course, the early nineties including the war years being particularly bad, but now I think we can safely say things are exceptionally bad again. If there is any good news from Moldova we certainly did not come across it during the study tour. 

Paige Alexander: Fortunately, the country has so much to offer including an impressive textile sector, rural agriculture acumen (grapes, stone fruits, etc.), and a burgeoning organics sector. As the country looks to the West, they have potentially competitive markets which could set it apart from its neighbors. One of the greatest needs they have is to attract FDI and this requires an effective regulatory system. The only way to secure their economic future is by establishing a fair and transparent rule of law and building a stable justice system. This, as we have seen throughout Eurasia, becomes the difference between success and being mired in endless controversies in the eyes of internationals. Moldova needs the West to believe it can succeed, but that only comes with adherence to strong set of democratic principles starting at the top.

Alena Kudzko: The one feeling that transpires political, economic, and social life in Moldova is pessimism. The frustration of Moldovans with the pace of reforms brought many to the streets following the banking crisis and mobilized the support for a pro-European candidate Maia Sandu during the 2016 presidential elections. The protests led to a change of six prime ministers in one year but failed to install a government that would introduce genuine anti-corruption measures. The fall of Maia Sandu to the pro-Russian Igor Dodon further subdued the willingness of many people to invest into the future of their country. Concentration of media in a few hands is also decreasing the opportunities for political competition.

Corruption and lack of a genuinely independent justice system is one of the main woes of the country. It has not only shattered the trust of the population in the government but is hurting Moldova’s economic potential. Few investors are interested in risky business ventures in a country with unpredictable rules of the game. Lack of economic opportunities at home and lack of hope for change keeps driving the immigration.

But the rather bleak analysis of the situation is not necessarily the reason to be negative about the country’s future. First, it should not be forgotten that the country has made noteworthy progress over the past decades and remains committed, at least rhetorically, towards further reform. Second, as a diplomat working in Eastern Europe once told me in a conversation about the region, coming to terms with reality and honest assessment of the state of affairs might be painful. But without admitting the unsettling truth one cannot move forward and work on fixing the established flaws. I was impressed by the drive and determination of many Moldovans to fix the flaws despite setbacks and challenges.
 
 
GMFUS
 
 
06.10.2017
 
 

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