Moldova: stuck in the middle

Europe’s poorest country must choose its friends wisely

“We are determined to advance towards Europe, because the people of Moldova deserve to live in a fashion other European people do,” Moldovan president Nicolae Timofti declared bullishly in July 2014, following the ratification of an association agreement with the European Union. It was meant to be the first step on the former Soviet nation’s path to European integration, and towards prosperity.

Much has changed in Moldova since then. It has mostly changed for the worse.

The country was plunged into crisis in December 2014 by a banking scandal that saw almost $1 billion, or one eighth of GDP, swindled out of the country’s three largest banks. Since then, six different Prime Ministers have taken office. The latest, Pavel Filip – formerly the Minister for Information Technologies and Communications – faced mass protests in the capital, Chisinau, within days of his election in January this year.

The outlook remains bleak. Moldova’s real GDP declined by 0.5% last year, according to the World Bank, while the UN Department of Economic and Social Affairs predicted in its World Population Prospects report that Moldova’s population of 4 million will shrink 20% by 2050, and more than 50% by the end of the century – more than any other nation.

Voters are at their wits’ end with corruption, falling incomes and rising unemployment. In an International Republican Institute survey published in April, 83% of Moldovans said that their country was heading in the wrong direction. More worryingly, 59% agreed that the fall of the Soviet Union had been a bad thing.

The Parliament is split between parties who look to the EU for answers, and those who favour joining the Eurasian Economic Union (EEU), Russia’s answer to the EU. This division will be reflected in September’s presidential elections, with the race likely to be contested between pro-Russia Party of Socialists leader Igor Dodon, and Harvard-educated economist Maia Sandu, of the EU-focused Action and Solidarity Party.

However, with the pro-EU coalitions that have governed the country since 2009 constantly in flux, and crisis after crisis taking place on their watch, pro-Russian parties have risen in popularity. Even Europhiles who voted for the ruling parties have given up on solving their problems alone. In 1918, the Moldovan government voted to unite with Romania, an arrangement that lasted until the Second World War; this March, nearly a century later, thousands took to the well-worn streets of Chisinau to demand Moldova reunite with its neighbour, an EU member with whom it shares a language.

But the grass is not always greener. Exasperated Moldovans tempted by Soviet familiarity should take heed of developments in Transnistria, to the east of the country.  A Russian-backed autonomous region with its own government and currency, Transnistria has long focused on trade with Russia and its allies.  However, with Western sanctions biting Russia’s economy hard, debt-ridden Transnistria has had to turn to other markets.

Moldova’s EU association agreement, which offers tariff-free exports to the Union, has offered it a lifeline. In the first three months of 2016, 58% of its exports went to the EU, compared to just 6% to the EEU. By encouraging Transnistria to consider itself part of Moldova through trade deals, it may be possible to break the political deadlock between regions. This would remove a significant barrier to Moldova’s potential EU accession.

The country once known as ‘the garden’ of the Soviet Union has wilted. With a new president willing to effectively tackle government corruption and pursue greater European integration through trade, it may yet blossom.

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