Weekly Roundup
July 21, 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!
A Never Ending Wave of Bomb Threats
In the past months the number of bomb threats being called in against Moldovan institutions have reached a fever pitch. The Ministry of Internal Affairs has reported that there were 103 bomb threats emailed into various institutions in the last 3 months alone. In response the Ministry has had to increase their bomb response staffing by 58% to keep up with the required inspections. The airport alone has had 7 threats and evacuations this month alone resulting in many delayed or canceled flights. Institutions large and small have been evacuated and inspected ranging from the Supreme Court of Justice, a Chisinau hospital, Stefan Cel Mare Park, a local monastery, and the city hall which was evacuated and searched twice in one day due to 2 different threats.
Prosecutors allege that these threats are the actions of an unnamed group dedicated to creating “unrest and destabilization in society.” President Sandu in an interview noted that the purpose is both to "destabilize the situation" in the country as well as to verify and test the capacity of state institutions to responded. The President did not clarify the question of why someone would be “testing” the state’s authority to respond to bombs but the idea undoubtedly has an ominous feel.
The Ministry of Internal Affairs has proposed legislation increasing the fines for false bomb reports from 50,000 lei ($2590) to 150,000 lei ($7770) and a prison term of 2-5 years. If threats are called as part of a criminal conspiracy the prison term could reach 12 years.
The threat of tougher sanctions does not seem to be deterring the criminals (or state actor) behind the threats and prosecutors have no announced suspects. They have simply announced that they have multiple suspects in and out of Moldova but without any public information as to who they might be.
The increasing pace of these threats and disruptions to public institutions, flights and even people walking in the park is a rare type of news in Moldova where everyone is following it but no one really has a public theory about what’s going on. Prosecutors and the government have not speculated much beyond a “criminal group” being responsible and the opposition parties are largely silent on the matter. Commenting on the evacuation of city hall twice in a day Mayor Ceban simply noted that “someone is busy today.”
Earlier in the year, a smaller wave of bomb threats occurred all around Moldova including Transnistria. At the time, speculation was that it may have been a sort of a game conducted by teenagers in an EU country. While there have been no actual bombs to date this latest wave of threats feels more sinister no matter who is behind it.
Preparations for Winter
The biggest story in Moldovan politics and government remains energy security. Europe as a whole is looking ahead very nervously to what could be a cold winter with Russia weaponizing energy in the context of the war in Ukraine. This week, the European Commission has asked all member states to cut natural gas usage by 15% through spring 2023 in order to assure that the block can maintain supplies through the winter. This is in the context of Russia cutting off some countries already and dialing back supplies to a trickle across the block in order to force EU countries to dip into strategic reserves now, in the warm season, and reduce stockpiles ahead of winter. With a record heat wave sweeping Europe and countries already dipping into their precariously low reserves Russia is counting on using threats of total cutoff in winter to force Europe to chose between heating people’s homes or supporting Ukraine.
Moldova is in a particularly precarious position as the country is reliant on Russia not only for most of its natural gas supplies but also for access to affordable gas. Essentially, this problem is twofold. Firstly, access to energy. Moldova’s gas pipeline from Romania is capable of supplying around 60% of the country’s needs in the winter. Moldova additionally has pipelines to Ukraine which could theoretically be used for back-flow supply from Europe *if* this situation meets Ukraine’s gas needs and *if* Transnistria plays ball (not all the pipelines go through Transnistria but most do). Additionally, in the case that supply is severely constricted Moldova can transition its Termoelectic (central heating) plants and electricity generation plants to fuel oil - a dirty burning oil product that is available from Romania. Electricity has similar problems where a cutoff of gas supplies would stop Transnistria’s ability to produce electricity from gas and cause Moldova to seek alternative supplies - mostly from Ukraine. So when thinking about a total shutoff of Russian gas the reality is that Moldova does have *some* options. Additionally, such a shutoff would likely lead to a shutoff of Transnistria which begs the political question of what the Kremlin is willing to do to their clients there.
In addition to supply there is question of cost. Ukraine has excess electricity but will be strongly incentivized to sell it to the EU in case of shortages where the price will be higher than Moldova is likely able to meet. Similarly, gas purchased from the EU will be astronomically higher than Moldova has ever experienced before and is likely to totally price most consumers out of the market.
What’s Moldova Doing to Prepare?
Mostly, the government is looking for money. Lots of money. This week Parliament ratified a loan of 300 million euros from the EBRD that will be used to create a strategic gas reserve, presumably stored in Romania, and to invest in diversifying energy supplies. The EU has additionally agreed to a 77 million euro grant to Moldova to help support the most vulnerable in the cold season. Prime Minister Gavrilita is on a sort of a world tour looking for additional sources of loans and grand support for Moldova to prepare for winter. This week she visited the World Bank and various US Government officials including Secretary of State Antony Blinken in Washington DC where the US pledge $64 million dollars to support Moldova’s long term economic and democratic development (not gas purchases).
Funds that Moldova raises for energy security will go into programs like the recent creation of the “Energy Vulnerability Reduction Fund” which will launch on September 1st. This program will categorize Moldovan households based on their energy / economic vulnerability and provide subsidies this winter on the basis of need. The categories will take into account number of family members, income, the share of energy in a household’s expenses, and more. No mechanism has been announced to support businesses and the strong implication is that the private sector will simply have to cope with higher prices. The details of the new fund are not yet public but the little information available raises some serious questions. For example, many Moldovans, even those with substantial incomes, do not earn money officially. So you can see a version of events where people who officially are unemployed but actually work a trade are prioritized. Additionally, if a household’s heating bill goes up by a factor of 5 this winter even well-to-do citizens will struggle hugely with this expense. We’ll have to see how this program is implemented but one thing is clear - this is not a blanket subsidy like last winter. This is a targeted measure. That implies that the government feels they will not be able to help everyone afford heat - just to prevent anyone from freezing.
Additionally, in order not to give GazProm an excuse to cut off the gas the government is now expediting an audit of historical debts to the company including appointing an auditor directly, bypassing the public tender process. If you recall, GazProm demanded payments of $709 million dollars in historical debts last fall and threatened a gas cutoff if it wasn’t paid immediately. Moldova refuses to recognize this debt unless an independent audit is finished and agreed to a May 1 deadline for this with GazProm. This deadline was missed due to the outbreak of war and GazProm has remained ambiguous as to what they will do next with an obvious threat hanging in the air.
In addition to concrete legislative actions and fundraising, Moldovan officials are beginning to speak out and prepare the public for a critical winter ahead. Speaking on the issue President Sandu Stated:
“I'm sorry to say this, but we also need to be prepared for a winter like this. This means that we should, as far as possible, insulate our homes to reduce heat loss, because that will be the biggest problem. The government is working on a compensation mechanism: a fund will be created to support citizens in need of this assistance,”
Responding to criticism from the pro-Russian opposition she continued:
“I'm not going to sell part of the country just to have cheaper gas for half a year. Our country is independent and we must stick to it. Yes, it's hard now, it's hard for everyone. And, last but not least, because during this time they did not develop alternatives, because they did not invest in energy projects - then they were not interested in this. The projects that we are doing now will pay off in 4-5 years,”
COVID-19
Yes, it is very unfortunate that we need to bring this section of the newsletter back. This week Moldova registered 3360 new COVID cases, a doubling from the total from one week ago. The new case rate has pushed Chisinau into the “Orange” code with masks being mandatory in medical institutions and recommended on public transport and in crowded areas. Hospital resources are being reallocated so that there are more front line beds if needed, though most cases are mild and the national death rate is actually falling this week. Transnistria has introduced a mask mandate for public transport and all indoor spaces as their cases rise as well.
With the outbreak of war in Ukraine and very low case numbers, Moldova has basically moved on from COVID. Masks are vanishingly rare and the government even stopped updating the COVID case tracker in April that we used to make charts in past newsletters. But while Moldova may feel done with COVID, COVID may not be done with Moldova as cases rise in the entire region.
Economic News
The main economic news remains the energy crisis and since we spent so much time on that here’s a rapid fire roundup of other important economic stories to follow:
Unified Minimum Wage - From September 1st, Moldova will have a unified minimum wage in all sectors of the economy. Currently, there are different minimums for public and private sector workers with many in the public sector being legally allowed to be paid much less. Additionally, job titles in Moldova aren’t just for business cards - there is an official book of all allowed job titles and each carries with it wage requirements. A unified wage not only bring up wages for some in the public sector but simplifies greatly the overall regulation around salaries.
European Council Increases Moldova Trade Quotas - Moldova will now be able to export more than double the amount of plumbs, grapes, apples and more into the EU market. The European Council says that these changes will help Moldovan farmers direct products to the EU in order to partially make up for lost markets due to the war in Ukraine.
New Laws on Parental Leave - Parliament has approved updates to the labor code around parental leave. Previously men were allowed to take up to 56 days of leave and women up to 3 years, paid at 30% of salary (calculated as an average of the year before leave was taken). Under the new rules men may take up to 12 months and couples may share parental leave and receive 90% of pre-leave salary if they take it in the first 1 year 2 months of their child’s life. The old option for 3 years at 30% remains available.
Revolut to Enter Moldova - PAS MP Dumitru Alaiba announced this week that British Fintech Company Revolut will enter the Moldovan market. Revolut calls itself a “bank without branches” and offers zero fee currency exchange and various payments products. This is the first time a major fintech company has entered Moldova since Paypal which never actually became useable for companies to make or accept payments due to legislative hurdles. We’ll see if the government manages a better process for Revolut.
More Pain for Farmers - Farmers are becoming extremely concerned about grain prices. Lack of shipping has meant that prices to transport grain have risen 3-5x and combined with other supply chain issues this means that farmers are reaping less than 1/2 what they expected from sales. Additionally, the country is experiencing a drought and combined with very hot temperatures in June this years harvest is in danger of being significantly worse than last year. The new Minister of Agriculture has declared he is preparing to recommend a national emergency due to the drought and noted that much of the corn crop has already failed and without rain or urgent irrigation changes the sunflower crop is also in danger. Experts say that Moldova is not in danger of a food shortage but farmers are in for a very bad year.
European Investment Bank EIB loans Moldova 150 million euros for road construction - Moldova is planning on paving 150 km of roads and will conduct a feasibility study for a ring road around Chisinau.
Gasoline Prices Finally Falling - The price at the pump has continued a multi week decline and fell below 30 lei / liter for the first time since May. This follows a global decline in oil prices but experts are split on whether the trend will continue in coming months.
Crime and Corruption
There have been a lot of stories this week around law enforcement efforts so we’ll do a rapid fire roundup of the main stories to watch:
Olga Bondarchuk Extradited to Moldova - Olga Bondarchuk, who served as the notary for fugitive oligarch Vlad Plahotniuc was extradited to Moldova by Belgium. Prosecutors accuse her of “…complicity in the theft of a billion — forgery of documents, false data in official documents, servicing a company involved in money laundering.” This is the first win Moldova has had in bringing back a major fugitive since the PAS government took power a year ago.
Shor Party MP Tauber flies to Israel - Marina Tauber, who is indicted for large scale money laundering and fraud left the country in spite of a court order preventing her from traveling. She apparently requested a medical exemption to go to Israel and was given it by the court over the objections of prosecutors. Tauber used the trip to meet with fugitive oligarch Ilan Shor and returned to Chisinau with the message that Shor will “return to political life soon” and that those in government now will have only minutes to pack their bags and flee when he does. Charming. Perhaps Olga Bondarchuk shouldn’t be so worried about being extradited too Moldova as the courts apparently allow vacations.
Mariana Tauber facing new charges - Interim General Prosecutor Robu appeared in Parliament today to ask once again for Tauber’s parliamentary immunity to be lifted so prosecutors could charge her with 2 new crimes related to illegal financing of the Shor party and forgery of documents. Simultaneously the National Anti-Corruption conducted searches regarding Shor party financing but the targets of the searches were not announced. Maybe the new charges will result in detention rather than court orders to “not leave the country unless you really wanna go on a trip.”
AMBER Alerts Coming to Moldova - Facebook has announced that it is bringing its AMBER alert feature to Moldova at the request of local police. In the case where a child goes missing the police can alert facebook which will then notify all users within a 160 km radius via facebook and instagram. Moldova is the 26th country where Facebook has added this feature.
Ending on a REALLY High Note!!
Literally. The Technical University of Moldova UTM sent the country’s first satellite into space this week!! The satellite is a 10 x 10 cm educational cubesat that was launched as a secondary payload on a Falcon 9 rocket this week. The rocket was flying a Dragon Spacecraft to the International Space Station which is where Moldova’s mini-satellite is currently residing. In early august it will be launched into orbit. The satellite is an educational project that will test various environmental sensors and has a video camera that will broadcast footage back to earth. Congratulations UTM!!!
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