Weekly Roundup

January 15 - 22

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!

This week, the plan was to do a normal Weekly Roundup but focus first and foremost on the brewing crisis in Ukraine… but about halfway through writing this article it was clear that this was simply not possible without stretching well beyond the acceptable length of an email newsletter. Simply put, the situation in the east is starting to blot out the sun and we needed to spend a lot of time focusing on it and the potential implications for Moldova. So today’s Weekly Roundup will just hit the main stories - Crisis in Ukraine, a gas crisis (again), and the Omicron surge. Admittedly it’s a fairly bleak lineup but these are the key stories of the week in Moldova. Next week we will catch up on more run of the mill news. 

Regional Tensions - Crisis in Ukraine

For the purposes of this newsletter, it’s time to recognize that even if the Moldovan media and government do not take a lot of notice of what is going on in the east, the most important story in Moldova right now is about Ukraine. Back in December we took a Deep Dive at Moldova Matters into the continuing Russian troop buildup on the Ukrainian border and the swirling conversation in the western press about the potential for a full scale invasion. We won’t revisit too much of this background information so anyone wanting to catch up can take a look at that article, or frankly just read the stories that are on the front page of most (non-Moldovan) news publications. Today we’ll take a look at the particular developments of the last week and try and address the question - what does this mean for Moldova?

The Drums of War are Beating Louder

Over the course of this week, diplomatic efforts aimed at averting a war appeared to have largely run their course with little to show for it. US Secretary of State Antony Blinken met with his counterpart Russian Foreign Minister Sergei Lavrov in Geneva for a brief meeting during which both sides essentially continued reiterating their main points. In a nutshell, Russia wants NATO to retreat to the member countries it had pre-1997 and remove all military units anywhere east of Berlin. Notably they explicitly mentioned Romania and Bulgaria in this list. The US meanwhile communicated to the Russians that if they invade Ukraine NATO and western allies will lever massive economic sanctions. The meeting ended with both sides saying that they hope to keep talking. 

In spite of that vaguely hopeful note at the end there has been a major change in tone over the past week. Commentators, journalists and government officials have largely stopped talking about “if” Russia will invade and are instead focused on “when” and “what exactly does invade mean anyhow?”  This was underlined when White House Press Secretary Jen Psaki stated that the US believes Russia may attack at any time. President Biden further reinforced this in a press conference by saying that he believes “Putin will move in.” Just today CNN reported that the US is preparing to evacuate families and non-essential staff from the US Embassy in Kyiv. Russia similarly evacuated their embassy and consular staff earlier in the week. 

To be clear Russia has already invaded Ukraine in 2014 with the annexation of Crimea and the proxy war in the Donbas. But we are not talking about any situation remotely similar to that one. There are well over 100,000 Russian troops on the border right now including a deployment of multiple army groups from Russia’s far east and pacific forces to Belarus. Additionally Russia is calling up reserves and organizing what looks like a follow-on occupation force. What is being discussed here is a full fledged, land, air and sea campaign the likes of which Europe has not seen since 1945. 

To give you an idea of what this might look like, the Center for Strategic & International Studies CSIS put out a report this week outlining potential scenarios (link in English). These scenarios envision various “stop points” for the Russian army and are basically a list of how far they might be planning to go should they choose to invade. While it is possible the Russians may want to run all the way to the Polish border, most thinking seems to gravitate around the following: an encirclement of Kyiv from troops coming from Russia in the east and Belarus in the north; occupation of all of Ukraine east of the Dnipro river; and the seizure of the whole black sea coast including Odessa. As we’ve discussed before in our Deep Dive, Odessa is the key city to watch in terms of Moldovan implications. In the scenarios outlined by CSIS where this happens they postulate a linking up with the Russian troops in Transnistria and possibly the annexation of Transnistria outright. 

Source CSIS Report “Russia’s Possible Invasion of Ukraine”

Estimates of just how likely any scenario is, or if there will be a war at all, vary considerably. Some well thought of Russia experts still believe this is all coercive diplomacy. At the same time, given that the President of the United States believes an attack is likely, we have to take the possibility very seriously. 

What’s Happening in Moldova Right Now?

This week, Moldova seems to have begun slowly waking up to the possibility of the largest war in Europe since 1945 happening right next door. Up until now the press has mostly reported on regional tensions as if they are something happening very far away. Furthermore, until the moment of writing this article the Moldovan government has made absolutely zero official statements about what is going on in Ukraine - though they have been forced to answer some reporter’s questions on the issue which we will look at below. 

The event that seems to have begun the process of drawing the Moldovan presses’ attention to the crisis was a statement this week from the Ukrainian Ministry of Defense. For a quick background it’s important to recall that the US government has repeatedly warned that Russian troops have already been deployed in eastern Ukraine for the purposes of staging a “false flag” attack. In such an attack Russian special operations forces would attack their own proxy troops in Ukraine and blame the attack on the Ukrainian army in order to obtain a “casus belli.” The Ukrainian Ministry of Defense this week reported that Russian special services are potentially planning such a false flag attack in Transnistria on the Cobasna military depot which they will blame on the Ukrainian army. Transnistrian troops have apparently been briefed to prepare for potential Ukrainian attacks on the military depot and been put on alert. For those who don’t know, the Cobasna arms depot is a *massive* Soviet era military storage facility that was left behind in Transnistria and which the Russians refuse to withdraw. Most of the munitions there are thought to be extremely old and potentially a danger for accidental explosions. One diplomat speaking off the record once said that if this depot were to have an explosion it would be among the largest non-nuclear explosions in history and would rattle or even break windows in Chisinau over 90 kilometers away. 

In a further worrisome sign the Russian army in Transnistria has held exercises including live fire of anti-tank weapons and grenade launchers in a “snap readiness exercise” in the past week. 

These reports and developments got the attention of the Moldovan press and resulted in both President Sandu and Prime Minister Gavrilita getting questions on the topic at press conferences this week. Addressing the question on Romanian TV President Sandu stated that Moldova is concerned about the tensions in the east and carefully monitoring the situation in Transnistria. She said that she was aware of the Ukrainian Ministry of Defense statements and is taking the situation very seriously, but that to date nothing in Transnistria seems out of the ordinary. She also addressed the various military scenarios that involve Transnistria being reported in the press saying that “no one should worry right now” but they are monitoring the situation and remaining vigilant. 

Responding to a similar question Prime Minister Gavrilita stated: “We are watching with concern the development of events in the region, the statements of Russia and Ukraine. We hope that the parties will be prudent and will not aggravate the situation. At the same time, all authorities [in Moldova] are ready, we are considering several scenarios and will act depending on the situation,” 

So what is going on with Moldova’s lack of interest in this situation?

Even given that fairly alarming information regarding Moldova discussed above we have still seen relatively little reporting of developing events in the Moldovan press and almost zero original reporting by Moldovan outlets discussing how this might affect the country. Further, the lack of any official statements from the government or President on this issue is really noticeable. People respond to questions for sure, but there hasn’t been an official statement or position. Not even a simple “we support the territorial integrity of Ukraine.” Meanwhile, the US President and White House are talking about this issue non-stop. Within Europe, NATO allies are currently pumping weapons, supplies, loans and other support into Ukraine with the notable exception of Germany. Now, unless Vladimir Putin is absolutely insane the chances of him deciding to attack a NATO country directly are miniscule. But a simple glance at a map will show anyone that within the potential theater of military operations there are only 2 non-NATO countries - Ukraine and Moldova. It is an objective statement to say that it is strange that we have heard more on this crisis from the Prime Minister of Canada than we have from the leadership in Moldova. So what’s going on?

Firstly, the government. As we will discuss below Moldova is yet again in the clutches of an evolving gas crisis that threatens to leave the country without heat in the coldest months of the year. This crisis is caused by Russia, and Moldova relies completely on Russia for its energy supplies. Negotiations have been ongoing this week and it is highly likely that the Moldovan government is avoiding any statements that would threaten to anger Russia in this context. Essentially, Moldova is a captive of its energy dependence. 

Regarding the press things are a little more complicated and any answer on their lack of interest gets somewhat speculative. This author’s personal theory is simply that the Moldovan press is not very accustomed to looking at what is going on elsewhere in the world. Moldovan politics and economics are generally seen as a domestic issue with international components. Outlets and journalists are very focused on issues at home and may not consider the impact of international crises as a matter of habit. Furthermore, in conversations with many well informed friends in Chisinau there seems to be a feeling best described as “America will make this problem go away and we don’t need to worry about it much.” The idea that Russia might actually invade is not taken seriously in some quarters and perhaps that explains the slow reaction time of the press. Whatever the case, it may be very hard not to pay attention soon.

How Could a War Impact Moldova?

In a fitting match to the Moldovan press largely ignoring Ukraine, the international press is almost totally ignoring Moldova. A fitting illustration of this was during this week’s Power Vertical Podcast (ominously titled “The Gathering Storm”) where host Brian Whitmore asked Military Analyst Michael Kofman directly about how this might impact Moldova. Kofman more or less just ignored the part about Moldova in what was admittedly a multi-part question and no one ever returned to the topic. Now, part of this makes sense on its face, if Russia does invade no one knows how far they will go. Or how well the Ukrainian army will do. Or if they really have any designs on Transnistria at all in this plan. There is a whole lot of terrible that would have to happen *before* Moldova is involved at all. That said, we should look at the 2 locations that this crisis could potentially impact Moldova - Transnistria, and Gagauzia. 

In terms of Transnistria, the impact is fairly clear and has been discussed a bit already. In some scenarios, notably the ones put forward by the Ukrainian government, Russian troops in Transnistria could be used in an attack on Ukraine. Now this isn’t exactly likely given that the Russian army in Transnistria has very little in the way of heavy weapons. At the same time, there are Russian soldiers there and combined with Transnistrian troops there are enough of them for Ukraine to have to consider them a factor. At the very least they will need to commit some troops to be present to defend against the threat of an incursion from that side. For Moldova’s part, having a breakaway region attack Ukraine would be, well… bad. But it’s not clear what it would mean directly for Moldova. The bigger fear is not of a highly unlikely attack from this vector but that in the event that Russia pushes its way right to the border with Transnistria the region will almost certainly seek to be annexed by Russia. This would pose major political problems for the Chisinau government who view Transnistria as an integral part of Moldova. A view that is shared by every country on the planet including Russia and the UN. 

Where things get potentially much more disruptive is in Gagauzia. The Gagauzia autonomous region in the south of Moldova largely sits directly on the border with Ukraine in an area likely to be occupied by Russia *if* they capture and occupy the city of Odessa. Gagauzia is a Russian speaking region whose political leaning is almost always in a pro-Russian direction. Should Russia, via occupation of Ukraine, suddenly become their neighbor, it is very likely that there will be a considerable secessionist movement in Gagauzia in favor of joining with the Russian occupied areas. Now, while Transnistria is largely composed of territory on the opposite side of the river from areas controlled by Moldova, Gagauzia has no such natural boundary. Worse still, Gagauzia is non-contiguous and intermixed with towns that are not part of Gagauzia as you can see on google maps. This means that any attempt by citizens of Moldova living in Gagauzia to secede from the country necessarily gets very messy. 

Without getting any deeper into hypotheticals it’s worth putting a bottom line here. If Russian forces take Odessa and approach the borders of Moldova it is highly likely that there would be a major political crisis in the country that could seriously jeopardize the territorial integrity of the Republic. This is not even considering Russia committing any troops or even a thought to Moldova. It is a fact of the internal political tensions in the country that any situation that rewrites the map of Ukraine will necessarily spill into Moldova in unpredictable ways. 

None of this is to try and make people worried - though it is an understandable reaction. The point of highlighting these key fault lines is simply to say out loud something that the Moldovan and international press is completely ignoring. Threats to Ukraine are also threats to Moldova. 

Gas Crisis… Again

At the same time as tensions roil in the east Moldova is facing another incarnation of the seemingly unending energy crisis. This week, GazProm noted that MoldovaGaz is obliged by its contract to prepay for 50% of the anticipated gas consumption for January - a bill of around $68 million dollars. MoldovaGaz has fully paid for gas consumed in December but faced a cash shortfall of at least $25 million dollars on the question of prepayment. MoldovaGaz attempted to seek bank loans but was rejected by all the banks they approached because they are essentially insolvent when considering the huge historical debt to GazProm that has been discussed before. MoldovaGaz then turned to its shareholders for a bailout and was promptly turned down by its largest shareholder, GazProm, and by the Transnistrian “government.” This left only the Moldovan government to bail out the company and keep the gas flowing and heat on throughout the country. 

Once it was clear that the efforts to get a loan had failed, the government asked parliament to declare a “State of Emergency in the Energy Sector” for 60 days in order to free the government’s hand (and wallet) to avert a shutoff. Once the state of emergency was declared the government was able to forward funds to MoldovaGaz in the form of delaying tax payments and other short term mechanisms to assure that the payment was made on time. 

In addition to the threat of imminent shutoff, the price of gas has risen again considerably. Members of the government and the President have sought to assure citizens in statements and interviews that Moldova is still getting a better price than most of Europe. But with people’s gas prices spiking through the roof this is cold comfort to the average person. Recognizing this, and recognizing that it is critical to lower these prices in order to prevent political consequences or even civil unrest, the government has increased state subsidies on energy prices from 67% to 80% starting from January 1st consumption. The maximum compensation will rise from 450 lei / month to 815 lei for each household. 

In attempting to explain why Moldova is rolling from one crisis to another in gas the Prime Minister stated that “the attitude of GazProm has changed.” The requirement of pre-payment has technically been in the gas contracts since 2011 but never been enforced before. Between 2011 and 2014 MoldovaGaz accumulated over $400 million dollars in debt to GazProm without any threats of shutdown. Now GazProm is constantly threatening gas cutoffs and finding different mechanisms to push Moldova’s government around. Everyone in the government was very quick to point out the changed circumstances, but no one directly said that this was a political act by the Russian state. Between the gas crisis and the Ukraine crisis Moldova is walking a tightrope without much of a net. 

COVID-19 Updates

Moldova is officially entering the Omicron surge as the country records a 7 day average of 2521 new cases per day and 11 deaths per day. As you can see from the chart though, these case numbers are misleading as the spike in cases is happening so quickly the 7 day average metric is rapidly being left behind. 

The Minister of Health has warned that Moldova could soon reach over 10,000 cases per day and that the new variant is spreading extremely quickly through almost all parts of the country. Chisinau officially entered the “red zone” but the government announced additional restrictions in addition to the ones prescribed by that color tier. 

Under the new rules, vaccine certificates or proof of recent illness are required for all indoor public spaces including all businesses except for essential services such as grocery stores, pharmacies, banks and gas stations. Restaurants must close at 10 pm, operate at 50% capacity, and honor the certificates rule. Nightclubs are closed and all private events canceled. The government is asking all companies that can move to remote work to do so. 

Universities in Chisinau went online this week and all schools will follow on monday. While the government hoped to prevent schools from going online, the Minister of Health warns that an influx of children is overwhelming the planned places in the children's hospitals. Very rapidly the children’s hospital in Chisinau found itself with 126 patients for only 106 beds and additional facilities needed to be set up for all the new patients. While the new strain is less deadly, the incredibly rapid spread and Moldova’s vaccination rate of only around 29% mean that this will be a very serious pandemic wave for the country. 

Ending on a High Note!

Wow, things are pretty dark this week. It was hard to pick out much in the way of good news though admittedly that wasn’t because there isn’t any - only because the big stories are blotting out the sun. So for this week we’ll keep it simple. Prices are going up, conflict is looming, Omicron is ranging, but life goes on. Moldova continues to work its way through a multitude of winter holidays and most people I spoke with this week were spending time with family and enjoying a sunny, if cold, January. So as Monty Python said - always look on the bright side of life! And keep sending in suggestions for High Notes! We’ll try to put them in the newsletter as they come!

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!