Weekly Roundup

December 30, 2022

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!

Moldovan Security and the War

Last week we did a Quick-Hit article about Moldova’s SIS Director and his statements about Russia potentially invading Moldova in the coming months. We wanted to use this article as a sort of year-end review of what the threats to Moldova are now, and what we can look forward to in the new year. In brief, the director of SIS badly communicated the situation and Moldova is in a far safer position than it was back in March. This was confirmed this week by the Ukrainian Military Intelligence Director who commented on the recent discussion of a re-invasion of northern Ukraine from Belarus saying: “It would be wrong to discount this possibility,” but that it is “also wrong to say we have any data confirming it exists.”

While we can put that particular discussion to bed, threats against Moldova’s energy infrastructure and information space continue. On December 29th Russia launched another massive bombardment of Ukraine’s energy infrastructure resulting in blackouts across much of the country. There were rumors that missiles again flew into Moldovan airspace but these were denied by the Moldovan Army which said that no missiles were detected in Moldova on their radars. More critically, there were no power disruptions in Moldova thanks to the continued supply of electricity from the MGRES power plant in Transnistria. Infrastructure Minister Spinu has announced that this agreement will continue in January with Transnistria providing 86% of Moldova’s electrical needs and that negotiations are in progress for the supply of 100% of Moldova’s needs in the future months. So long as this agreement holds we will most likely not have a newsletter section titled “Energy Crisis” for a change.

Meanwhile, the Moldovan Army has been holding exercises with live fire drills at Military training grounds near Balti and Cahul. Residents in Balti reported hearing explosions during the drills. Moldovan authorities have been clear about giving advanced warning of exercises so as not to cause alarm, but they have also been very clear that people should not record photos or videos of moving military equipment. It is clear that the focus on military training and preparation is completely different at the end of 2022 than it was in January.

Information War

The biggest political story of the past 2 weeks has been the Commission on Emergency Situations’ decision to suspend the licenses of 6 television channels in order to "protect the national information space and prevent the risk of disinformation and attempts to manipulate public opinion." The broadcast licenses were suspended in relation to disinformation about the war and will not be re-instated until the State of Emergency passes. The stations are TV6, Orhei TV, Primul in Moldova, Accent TV, NTV Moldova and RTR Moldova. Some of these stations are known to be affiliated with Ilan Shor (recently), the Socialist Party (before being moved to Shor), and ultimately Russia which distributes ownership through shell companies to oligarchs in the Kremlin’s favor.

The suspended stations claim that this decision is illegal and an attack on freedom of speech. The “People’s Ombudsman for Human Rights” agrees saying that the move to suspend channels by emergency degree rather than through the courts is a violation of their rights.

Explaining the decision, Prime Minister Gavrilita noted that:

“For almost 300 days of the war in Ukraine, propaganda in Moldova has not stopped, but even intensified. In a situation in which not only an energy war is going on against our country, but also an information war, our responsibility and duty is to protect citizens and the country,”

Predictably, the Socialist party disagreed and will challenge the suspensions in court. They have also held protests outside of parliament and staged a protest in parliament by blocking the rostrum and holding up banners accusing the government of authoritarian practices. Following this protest, the Socialists and the Communists walked out of parliament and vowed to boycott parliamentary meetings permanently.

In a sense, this story is uncomplicated apart from process questions. It’s about being pro or anti Russian propaganda in Moldova. A more interesting question though is about timing. As the Prime Minister noted, the war has been going for more than 300 days. Why did it take this long?

Political Maneuvering by the Opposition

As 2022 comes to an end all parties are shifting their focus to the local and regional elections in 2023. In Moldova’s fractious political system this often means the reorganization or creation of political parties in the opposition. One example this week was the move by the new leader of the extra-parliamentary party Platforma-DA to purge the former party leader Andrei Năstase as well as the party’s entire faction in the Chisinau city council from the party. Dinu Plıngău, the new leader of DA, announced the move in response to the DA faction in the city council supporting the construction of 4 new high-rise buildings in the city. The construction permits were supported by the Socialists, Communists, and multiple small parties while being fiercely opposed by PAS. Dinu Plıngău joined the PAS faction in alleging corruption, and noted that DA lost all their parliamentary seats under Nastase anyhow. Nastase announced that DA faction in city hall will keep their seats and (confusingly) continue calling themselves DA. This schism is likely an indication that DA, once one of the 3 parties most responsible for ousting Plahotniuc, is descending into permanent irrelevance.

Meanwhile, Chisinau Mayor Ion Ceban’s MAN party held their first party conference where it was decided that the party would be “Social Democratic and Pro-European.” No platform or positions were announced. The fact that the party had to meet to decide their basic ideological orientation proves once again that parties in Moldova are less political movements than tools of individual politicians. Mayor Ceban announced that the party would participate in local elections as well as future presidential and parliamentary elections. He said that the candidate for president would be decided by the party at a later date (sure).

This week a study by the Romanian Center for European Policy was released indicating that Ceban is the Moldovan politician most supported by Romanian political groups. He attends more events in Romania than any other politicians and regularly courts support from Romanian political parties. The report noted that Romanian parties have previously preferred “Plaha-style” leaders (read corrupt oligarchs) and have been colder with President Sandu and the PAS Party. Given that Ceban is widely viewed as being tacitly supported by Russia, his international connections may make him a more serious contender than the platformless MAN Party would imply.

Parliament and Government have been Busy Before the Holidays

Before going on break for the New Years holiday, parliament and government announced a number of new initiatives and succeeded in passing some reforms in a flurry of activity. Here’s a roundup of some of they key actions and announcements.

• Patenta extended until December 2023? 66 PAS Deputies voted for a Socialist led bill to extend the Patenta system for another year. As we’ve talked about in the past, the Patenta system is a sort of “taxi medallion” for small companies who pay a once yearly tax of around $30 and are exempt from all other taxes and reporting. No new Patentas have been issued in years, and many governments, including the current one, have pledged to eliminate a system that allows some holders to make more than 50,000 euros a month in tax free income. The decision of PAS to support the initiative is further perplexing given that the Ministry of Finance announced the program would end in June when they presented their budget just weeks ago. The bill was only voted in the first reading, meaning that a second vote is required for it to become law. Normally, massive cross-party support would guarantee passage in the second reading, but PAS members continue to claim that they plan to eliminate this system so… who knows.

• Major reform to maternity leave passes parliament. The reform will allow women on maternity leave to chose to work part or full time while retaining maternity benefits. It will also change how benefits are calculated. Previously benefits were paid based on the mother’s salary in the year before the baby’s birth. The new system will use the mother or father’s salary for calculation - whichever is higher. Moldova has a very long maternity leave system (3 years) and many women are forced to chose between losing benefits and returning to work. As a result, many work for “salaries in envelopes” or cash payments.

• Labor Inspectors given greater powers to crack down on salaries in envelopes. Inspectors are being reformed on a risk-based targeting criteria and will have more power to conduct unscheduled inspections of companies. Traditionally, these inspectors have been a major source of corruption in Moldova so it will be interesting to see what safeguards are put in place to prevent them from abusing their new powers.

• The Ministry of Economy is proposing a law on cybersecurity. Moldova currently has almost no cybersecurity framework. This law, supported by EU experts, will provide for a national cybersecurity response center, mandatory and voluntary reporting of data breaches at companies, designation and hardening of critical infrastructure and more. Minister Alaiba has said that the bill will be brought to Parliament in February.

• Salaries for Ministers to increase in 2023. The government announced that salaries will be increased by 8000 lei (15,000 to around 20,000 lei after taxes) for government ministers. The pay rise was justified because past governments padded minister salaries with “salaries in envelopes” from oligarchic funds. Without such extra-pay the salaries are not high enough to attract good candidates or to retain them.

• National Program for the Study of the Romanian Language for National Minorities is announced. Moldova will launch this program, providing free adult education for non-Romanian speakers in Moldova next year.

Finally, a final political announcement near and dear to my heart was announced last week. Vlad Shulyansky, who co-founded Smokehouse restaurant with me in 2014 was appointed an advisor to the Minister of Economy. Vlad has about as much experience as anyone in the corruption and needless bureaucracy that afflict small business and prevent the Moldovan economy from flourishing. He’ll be a major asset to the ministry as it works to create badly needed reforms.

Announcing the appointment, Minister Alaiba wrote:

“Meet Vlad Shulyansky if you don't know him. He joined our team at the Ministry of Economy. If there is anyone in the country who is more infuriated than me by the senseless bureaucracy and stupid rules, it is Vlad,”

Congratulations to Vlad and to the Ministry!

Economy and Infrastructure Updates

Here is a short roundup of the news:

• Moldova’s top source of foreign investment is… Cyprus? Cypriot companies invested $843 million dollars in Moldova in 2021, up from only $127 million in 2020. Cyprus is known for opaque shell companies used to hide the real owners of a company so this isn’t really great news. Top "Cypriot" companies investing in Moldova include Transoil (American), Giurgiulesti port (Transoil and others),

  Moldova AgroinBank MAIB, Purcari Winery, and Premier Energy (the electrical utility).

• Moldovan state owned companies are not very efficient. A new study that measured sales per employee found that Moldovan private companies were 2x more efficient than state owned, companies in Moldova with foreign ownership were 3x more efficient, and mixed-capital (part foreign and part Moldovan owned) companies were 4.6x more efficient.

• The Chisinau Arena opened for its first concert of December 24th. The arena was a costly vanity project started by Plahotniuc and likely a channel for substantial graft during the oligarch’s rule. The PAS government inherited the project near completion and chose to finish it over the past year. Unfortunately, the workmanship appears not to be very solid as a spectator fell from the balcony during the first concert when a railing he was leaning on gave way. His wife says that it was not screwed into place. The man remains in critical condition and is likely to spend the rest of his life in a wheelchair.

• Romania has allocated 16.4 million euros to build a new bridge across the Prut. The bridge will be built near Ungheni more closely connecting Chisinau to the city of Iasi. Romania is currently in the process of building highways from its western border across the country. Once completed they will link to Iasi and then Chisinau will have a much faster route into western Europe. Currently, driving across Romania is an adventure of tiny mountain roads clogged with trucks.

That’s a wrap on 2022!

… and what a year it’s been. I started Moldova Matters in February 2021 largely because I wasn’t any good at making sourdough. What started as a pandemic hobby almost immediately morphed into something else as we went through the Constitutional Crisis of spring 2021, elections, more COVID variants, energy crisis and then the total mess that has been 2022. Looking back at this year feels impossible right now but in time I know it will be one I look back on as one of the most consequential in my life. Thank you all for reading Moldova Matters and keeping up with the news from this small but important country. Thank you especially for those who have supported the newsletter with a subscription, it hugely helps me keep up with the workload. Finally, the biggest thanks to all of you who became involved in the refugee relieve efforts at the beginning of the war. I received lots and lots of emails asking how to donate, offering to volunteer, or asking about some other way of becoming involved. In one of the hardest and also most impactful periods in my life this was a tremendous support.

If you’re celebrating the new year in Moldova, remember - fireworks remain banned! Since the start of the war the government has believed (correctly in my opinion) that unexpected sounds of explosions are probably a bad idea. Last week 6 people were fined for fireworks on Christmas. In true Moldovan fashion however, stands and companies selling fireworks are all over the city and doing a fine business. So legal to sell, illegal to use, I’m sure there will be lots of them.

Wherever you are celebrating the holiday, I wish you a good time bidding a not-so-fond farewell to 2022. Let’s all hope that 2023 will be a better year for Moldova and the world.