Weekly Roundup
June 26th
Welcome back to Moldova Matters! In this weekly roundup we will check in with the top stories of the week in Politics and Economics. Subscribe to Moldova Matters to get our Weekly Roundup and other content sent right to your email! And consider becoming a paid subscriber to support our work at Moldova matters. For just $5 / month, the price of a nice coffee, you can support this work and help us expand into even better content!
State of Emergency Extended
Since the beginning of the invasion of Ukraine by Russia in February 2022 Moldova has lived under a State of Emergency granting the government additional powers to address the crisis. This week, the State of Emergency was extended for another 45 days by the National Commission for Emergency Situations. Explaining their decision they said:
"… continuing risks for the country's energy security, border security and the need for further management of refugee flows."
While Moldova faces a multitude of challenges right now the most immediate is certainly energy security. This week the EU Parliament approved a plan whereby member states would seek to fill their energy stockpile capacity to at least 80% this summer in anticipation of Russian natural gas cutoffs in the cold season. While this plan is laudable in its intention, it is far less clear that this is even possible. Poland, Bulgaria, Netherlands, Finland and Denmark have already been fully cutoff from Russian gas supplies over their refusal to pay in rubles. Other countries are bringing coal power plants back online in order to prepare for further shortfalls in natural gas supplies. Germany’s Nord Stream 1 pipeline is only operating at 40% capacity due to what the Russians call "problems caused by sanctions.” Politico’s EU branch wrote this week summarizing the challenges and mitigation efforts and positing that Russia is clearly controlling supply in order to run down EU reserves by winter. Russia’s position as a dominant energy supplier gives them the ability to squeeze Europe while always threatening a full cutoff. Germany and other countries are preparing for this scenario not only by stockpiling but also by beginning to discuss energy rationing.
Moldova is especially vulnerable in this sphere as it does not have pipeline capacity to fully support the population through the cold season from Romania. The Ungheni pipeline has capacity to supply around 60% of Moldova’s needed supply in the cold months. Worse still, Moldova has no gas storage facilities in order to create a strategic reserve.
This week, the European Bank for Reconstruction and Development EBRD announced a loan of 300 million euros to Moldova to support energy security investments. Of this 200 million euros are for an emergency purchasing fund in the event of a cutoff from Russia. A further 100 million euros will go towards the creation of a strategic reserve held in Romania where there is spare tank capacity. This is a serious investment and will give the government tools with which to address a potential cutoff or shortfall in supply. With that said, it is no silver bullet and major concerns remain including the supply capacity through the pipelines from Romania.
Prime Minister Gavrilita announced this week that in addition to these moves, she is calling on her ministers to present a plan for securing a sufficient wood supply for the winter. Many Moldovan homes are heated by “sobas” or traditional wood fire stoves and prices are already spiking as people stockpile for winter. Moldova has nearly zero wood reserves itself and imports much of its wood for burning and for construction from Ukraine. The Prime Minister spoke in a meeting of her cabinet on energy security noting that the Ministry of Labor and Social Protection had in place plans for energy subsidies for those in need this winter. Additionally, Minister of Infrastructure Spinu noted that by September the government would be presented with a long term energy strategy prioritizing renewables and planning as far forward as 2050. The Prime Minister welcomed both ministries’ plans but noted that firewood was lacking and called for more work in that area.
Food Security and Economic Instability
In addition to energy, food security is a massive concern emanating from the war in Ukraine. This week, Russia struck a food storage warehouse with a cruise missile in the port of Odessa further providing evidence that they intend to use famine as a weapon of war. The EU Foreign Representative Josep Borrell noted:
“Millions of tons of wheat remain blocked in Ukraine while in the rest of the world, people are suffering hunger. This is a real war crime….”
With this backdrop, Moldova’s ban on exporting grains came to a head this week. Farmers have threatened nationwide protests and this week began limited regional protest actions as a warning to the government. They implied, that if their grievances were not heard, the next protests would be in Chisinau and involve blocking streets with tractors. As these protests began Prime Minister Gavrilita traveled to the regions and met with representatives from the farmers to hear their concerns.
Following these initial protests, but before larger ones kicked off, the Ministry of Agriculture announced that it was lifting the export ban on wheat and rye flour. The export ban on sugar would remain in place. They justified their actions noting that Moldova has than sufficient reserves to get to the next harvest and that therefore export could continue. It was a dry statement and highly technical but hidden in it was a major victory for Moldova’s farmers.
Moldova Building Infrastructure at a Record Pace
The Russian Invasion of Ukraine has thrown a massive spotlight on Moldova’s infrastructure deficiencies. No electrical connection to Europe. 75% of Moldovan electricity produced in Transnistria. Insufficient gas connection to Romania. Rail lines to Odessa that travel through Transnistria (where the Ukrainians blew the bridges long ago). Insufficient customs and border processing capacity to deal with the uptick in trucking. The list goes on and on and on.
While these challenges are daunting the rapid response of the government and Moldova’s neighbors has been impressive. This week Ukraine and Moldova announced that they would resurrect a Soviet era rail link between Ukrainian Berezino and Moldovan Bessarabca. This line has been abandoned for 25 years and the 2 countries now plan to put it back into service in the next 4 months. The connection requires 23km of railway construction (only 1.2 km in Moldova - the rest in Ukraine). This railway connects the south of Moldova to the southwestern region of Ukraine and will give Moldova access to the Ukrainian Danube river port of Izmail. Ukraine meanwhile, will be able to connect rail lines from the port of Odessa into Europe through Moldova and replace lines that were cut when the bridges to Transnistria were blown up. Questions remain over how this will work as it implies the use of the Zatoka bridge which the Russians have struck many many times with missiles fired from the Black Sea.
In a second, and even more astonishing project in terms of speed and pure resourcefulness, Moldova and Romania are opening a new border point across the Prut river between Moldovan Leova and Romanian Bumbeta. What makes this quite a feat is that there is no bridge right now and the 2 countries are planning to bridge the river with a military style pontoon bridge in order to create a temporary trucking link. Work on this project is already underway.
Political Updates
As we discussed in the Weekend Update the biggest news in Moldova this week is the fact that Moldova has been granted EU Candidate status. Reactions have poured in this week with important statements by politicians and a general attitude of celebration on social media. Moldova released a fun video marking the occasion saying thank you to the EU in all of the member countries’ languages
Speaking on the occasion, President Sandu said the following:
“The project we are starting now, on the way to EU membership, will take several years. This is not my project, not a project of the government or parliament - this is the project of our generation, this is your project. And its success depends on all of us. We are ready to pay any political price for the implementation of this project. Our task is to do everything so that citizens can live in peace, stability, in a country that is developing and moving forward. The Republic of Moldova is part of the European family,”
Speaking of the effort that brought Moldova to this point, Prime Minister Gavrilita said:
“Moldova seized the historic opportunity provided by the European Union. This is a chance that we could not miss with a political force that is sincerely committed to reforms, with the desire to bring European economic and social standards to Moldova. I know that the assignment of this status was not an easy decision. We worked for him until the last minute. We fought a big diplomatic fight to convince European politicians to support us. And we succeeded,”
Of course, not everyone was happy. Mr. Dodon, speaking on social media from house arrest, said that none of this matters. He says that the EU is unlikely to actually take Moldova as a member and that the EU itself might not even exist in 5-8 years! So that’s one point of view.
Rapid Fire Updates
In addition to the big updates there have been numerous important but smaller updates this week. We’ll handle them in a rapid fire roundup:
Unanimous Vote in Parliament?! - In a rare showing of intra party unity MPs voted 75 to 0 to ban alcoholic energy drinks in Moldova. The initiative, put forward by PAS MPs is largely based on American CDC studies on the harm caused to youth of these drinks and the fact that Moldova had no previous regulation on caffeinated alcoholic beverages. The initiative was supported by the PAS, Shor, Socialist and Communist parties.
Potential Major Reform to Higher Education - Moldovan outlet Newsmaker reported this week that Moldova is preparing for a reform massively consolidating higher education institutions. Citing anonymous sources, but having confirmed the facts with the ministry of education, the outlet noted that Moldova previously had 7 universities in the Soviet times but now has more than 20 (16 public and more private). The government is considering consolidation in favor of the larger universities and giving options to the smaller schools to join or affiliate with the larger ones. Of the state universities, one each is in Balti, Cahul, Comrat and Taraclia and the rest in Chisinau. All Moldovan universities have seen falling applications and attendance in recent years and has faced major challenges. The ministry declined to provide details but noted that more information would be released soon.
Moldova Introducing 3 new Degree Options - In another story on higher education, it was announced this week that USAID is sponsoring the creation in game design, animation, and multimedia production. These degrees will be offered at the State University, Technical University, State Pedagogical University, and the Academy of Music, Theater and Fine Arts. The degrees will further specialize into sound engineers, producers, animators, VR/AR programers, UX/UI designer, 3D modeling and more.
Cabinet Shakeup in the Works? - Speaker Grosu spoke openly about the fact that government ministers were going through an evaluation period on the 1 year anniversary of the formation of the Gavrilita government. He is one of a growing number of voices to speculate openly that Moldova may see a cabinet reshuffle in the near future. He said:
"Reshuffles are a normal thing in any government. They must be made when there is a decision and when it is the right time. Any government needs to make an assessment in certain areas. We make evaluations on the inside, on areas, on ministries. The moment we have a decision, the prime minister will come and announce. We are evaluating all the ministers, now we have a year and it is natural to make some evaluations. There are more vocal, more present, more dynamic ministers and some more modest ones. I believe that these ministers have done and continue to do an extraordinary thing in the situation where, in addition to their internal agenda in the ministry, they have to manage other crises that do not belong to us. They have done and are doing an exemplary job. That there is room for better, let us do the evaluations to the end and at the right time we will definitely come and communicate. Nothing is nailed down "
Crime and Corruption
Igor Dodon’s house arrest has been extended by the court for an additional 30 days as prosecutors prepare the case against him. In addition, the Anti-Corruption Prosecutor’s office has seized his property including his house in Chisinau, multiple plots of land and 4 cars. They allege this property is the result of illicit enrichment. Mr. Dodon responded saying that this was all propaganda and noting that the freezing of his property and the property of his extended family would create pressures as all of this land would remain frozen until the case against him is completed - perhaps in some years. He went on to push the same talking points about this being designed to distract from the state of emergency (inflation, gas prices, etc etc etc).
The Competition Council Speaks
In arguably the largest law enforcement action in recent memory, at least in financial terms, the Competition Council has fined Avia Invest, the company that runs the Chisinau airport, for 31.21 million lei (and counting) ($1.6 million). This company, which has unclear ownership but is widely assumed to be affiliated with Ilan Shor, was previously cited for anti-competitive practices in relation to ground handling services. The company was told to correct behavior that favored associated party contracts by January 1, 2022. Avia Invest ignored this court ruling and the Competition Council decided to levy a fine of 5% of daily revenue each day they failed to comply (hence the 31.21 million lei as of writing). This is a major fine and caused some whiplash in Moldovan media. Avia Invest has called this sanction “absurd and illegal.”
Information War
President Sandu signed the new law on disinformation banning Russian news, informational and analytical programs and military films in Moldova. The law came into effect Friday June 24. Russian Foreign Minister Lavrov responded by saying that Moldova was trying to “cancel” Russia and making the normal array of threats.
Foreign state media is constrained and there are rules requiring a sort of “fairness doctrine” for reporting both sides of the story. This week, we saw how this might be applied as outlet ITV was fined, and 2 other TV stations warned, because their coverage of Dodon’s arrest did not adequately present his side of the story. There is nothing simple about media regulations, but there is hope that they will be applied fairly.
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