Weekly Roundup
November 14 - 19
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!
Moldova on the Road
This week Moldova’s top leadership was taking the show on the road with Prime Minister Gavrilita in London talking up investment in Moldova and meeting with business leaders. First the Prime Minister met with representatives from CitiBank and JP Morgan to discuss ways that Moldova can better access international capital markets. Both banks have expressed interest in helping Moldova with this question and the Prime Minister noted the possibility of Moldova issuing bonds in euros at some point in the future.
Following these working meetings, the Prime Minister opened the “Days of Moldova” event on the London Stock exchange talking about the opportunities for investing in Moldova. She spoke about the government’s work towards reforms and the priority of fighting corruption and strengthening the justice sector in the country. The Prime Minister is hoping to attract foriegn investment and said "Our government is for business - we welcome investments and intend to improve the image of Moldova in the world.”
Meanwhile, Minister of Foriegn Affairs and European Integration Nicu Popescu was in Russia talking to his counterparts. The Minister met with Dumitri Kozak at length talking about Transnistria and reiterated the Moldovan position - withdrawal of Russian troops, and a focus on the 5+2 negotiating format for a long term resolution. Minister Popescu also met with Russian Minister of Foriegn Affairs Serghei Lavrov focusing on bilateral trade issues. Specifically the discussion focused on the lifting of agricultural goods embargos that the Russian government has put in place at various times over the years in order to “encourage” Moldova not to follow a path of European integration. The talks were reported as constructive and Minister Lavrov was officially invited to come to Moldova for more talks. In follow up press conferences Lavrov made a point of saying that Russia really did not put any political pressure on Moldova with the gas crisis and that any reporting suggesting that was simply western propaganda. Such are the fictions of polite diplomatic relations.
Meanwhile, the flurry of travel continued with the Prime Minister returning to Moldova in order to greet USAID Administrator Samantha Power who came on a working visit to the country. Administrator Power is the highest ranking member of the Biden administration to travel to Moldova and her visit was a major diplomatic event in the country even if it created almost zero press and little social media buzz. At a joint press conference with the Prime Minister, Samantha Power reiterated US support for Moldova and announced a USAID investment of $32.8 million dollars into the country. This money will be focused on economic digitization and media in order to build on USAID’s success with TekWill, the first digital technology park in the country. In remarks the USAID administrator praised the Moldovan people for a democratic transition to a reformist government saying “all around the world democracy is receding and under threat… apparently the Moldovan people didn’t get the memo.”
Rumors of a Cabinet Reshuffle Persist
This week President Sandu was asked during a TV interview to confirm rumors of a cabinet reshuffle. Specifically she was asked if the Prime Minister was to be replaced. The President called this an “absolute lie and untruth” and categorically denied that any cabinet reshuffle was in the works. At the same time, Deputy Speaker of Parliament, PAS MP Mihai Popsoi, fueled the rumors by hinting in a TV interview that a reshuffle may be imminent at least for some ministries. Prime Minister Gavrilita categorically denied this.
So what’s going on?
Hard to say. Rumors can be started and circulate for any number of political reasons. The categorical denial from the President seems to indicate that these are just that - rumors. At the same time message discipline within the PAS leadership seems somewhat lacking and it’s possible this is a sign of some tension at the top level of the party. We’ll have to wait and see.
Director of Civil Aviation Fired… Again.
This week the Minister of Infrastructure and Regional Development Andrei Spinu fired the Director of Civil Aviation over accusations of mismanagement of the Chisinau airport. The same director was previously fired in 2019 by the Maia Sandu government only to be quickly reinstated when the government fell. The management of the airport by foriegn companies linked to various oligarchs has long been a hot button issue for PAS with accusations of corruption and mismanagement abounding. Beyond that, the firing highlights the revolving door of bureaucrats suspected of corruption being fired by a reforming government only to be reinstated once power swings back to the oligarchic interests. Let’s hope these new actions have some more staying power.
Update on Energy Prices
Parliament and the Government have passed their package of energy subsidies designed to blunt the worst effects of the price hikes for the winter season. For each household, the first 50 cubic meters (cubes) of natural gas will be subsidized 67% by the state. The next 100 cubes will be subsidized 50%. Total subsidies will be capped at 450 lei / month per household. For most households in Moldova this will result in most or all of their energy costs being subsidized in some manner during the winter. At the same time, even with the subsidies, prices will be up compared to last year in a way that people are sure to notice this winter. Businesses will not receive any subsidized energy under the plan.
Meanwhile, the Ministry of Infrastructure and Regional Development seems intent on making sure that a repeat of this year’s energy crisis does not occur. Minister Spinu signed an agreement with Indian company KEC to design and build high voltage transmission lines from Vulcanesti to Chisinau. These lines will allow Moldova to connect to the EU power grid through Romania and not be so reliant on Transnistria for electricity. The project also includes modernization of a power plant in Chisinau and will cost 270 million euros altogether. This will be funded by the World Bank. The new transmission lines will be able to provide 600 megawatts of power which is very significant with Moldova’s current consumption of 1,100 megawatts. Interestingly, this 1,100 number represents 800 megawatts for the right bank and 300 megawatts for Transnistria. Given the small population of the breakaway region we can see that Transnistria *easily* consumes two times as much electricity per head as the right bank. Some of this is likely due to the breakaway region being extremely popular with cryptocurrency mining companies who capitalize on Russian subsidized energy pricing and “loose” regulation.
COVID-19 Update
This week we have continued to see a decline in new COVID cases with a 7 day average of 824 cases / day. Deaths continue to climb at 58 deaths a day on average. With these numbers it appears that we are finally coming out of this 3rd wave of COVID infections and hopefully the death rate will begin falling soon as well.
With the improving situation all parts of Moldova have exited the “red zone” and Chisinau and Balti are now officially in orange. This allows bars and restaurants to increase their capacity from 50% to 75% but still only allow vaccinated customers through the door. Weddings and other events are also allowed for the vaccinated.
Vaccination Updates
This week the Ministry of Health approved vaccination for children over 12 with the Moderna and Pfizer vaccines. Moldova does not actually have any Moderna doses but the supply of Pfizer vaccine is sufficient that any parents who want to get their children vaccinated can now make appointments and go get the shot.
Meanwhile, the European Union has fully recognized Moldova’s COVID vaccination certificates as “Equivalent to a digital EU vaccine certificate.” While this is a great sign that Moldovans who are vaccinated will be able to travel more widely in the future, it does not guarantee acceptance as individual EU countries can still put in place country level restrictions.
A Vaccination Innovation in Ukraine
This week Ukraine announced that there would be anonymous vaccination clinics set up for people who want to be vaccinated but not be recorded as being vaccinated. While this sounds counterintuitive and will undermine the country’s ability to track vaccination rates or use vaccine certificates as a limit on gatherings the logic is actually very compelling. Ukraine, like Moldova and Romania, has a major problem of people getting fake vaccine certificates. The mechanism for this is that people bribe the doctor in order for the doctor to shoot the vaccine dose into the sink and give a certificate as if the person was actually vaccinated. In addition to being extremely hard to catch this fraude, there is another major problem - people who have bought these fakes are now unable to change their minds. Since you are officially vaccinated in the system the government will not let you come back and get more shots. The anonymous clinics are designed for people wishing to change their minds. It’ll be interesting to see how this works as a pragmatic public health approach to a problem of corruption. Perhaps Moldova should consider doing the same.
Economic Update
Just like everywhere else in the world, the economic watchword in Moldova is “inflation.” Official numbers from this week show 2.12% inflation between September and October alone. This represents an 8.81% increase in October 2021 compared to October 2020. Driving this inflation is fuel, up 29.08%, building materials, up 20%, and food, up 12.73%. Expert from think tank IDIS Viitorul Veaceslav Ionita cites record low inflation in 2020 as well as increased incomes driving increased demand as the primary factors. He also noted that inflation is a global factor right now and that local Moldovan issues related to demand and supply chains are only part of a much larger picture. Since Moldova is a net importer (2.4x more than exports this year - a record) it is especially susceptible to regional and global trends.
Crime and Corruption
This week, multiple new cases have been opened against Vladimir Plahotnuic targeting properties that he acquired while in office through (allegedly… presumably) illegal means. Moldova’s Security and Information Service SIS provided evidence of luxury yachts, real estate in Switzerland, Romania and Spain, as well as other property that belongs to the disgraced oligarch. As the authorities work to seize this property, Mr. Plahotnuic’s lawyers lost a petition that the court give back other properties previously seized from the oligarch. These included 11 cars, 11 residential properties, one non-residential property, bank accounts, and 17 more buildings. These holdings are spread across Moldova, Switzerland, France and Romania. Most properties were registered in other persons names but did in fact belong to the oligarch.
Meanwhile, the former head of the Public Services Agency (ASP) was arrested. He is suspected of issuing illegal passports to the inner circle of Mr. Plahotniuc under various false identities. It is known that Plahotnuic himself had multiple passports under various different names.
Mr. Plahotniuc himself is still a fugitive from justice - whereabouts unknown. But these efforts to repatriate stolen national wealth and to destroy the corrupt networks he left behind are a major step in ridding the country of his influence.
Cleansing the Bureaucracy
The PAS government ran on a program of “cleansing” the state and this week has taken many more actions towards this goal. The deputy director of the Moldova Postal service was detained under suspicion of issuing fake contracts for the provision of IT services to multiple shell companies. These contracts were kept small to avoid the need to do public tenders but still amounted, in aggregate, to a small fortune that the bureaucrat allegedly managed to steal from the state.
Meanwhile, the Border Police have announced that they have fired or reassigned 120 officers and civil servants since August and that there are 120 official investigations open against illegal actions by border guards. Some employees were fired, others reassigned, and others given early retirement. The Minister of Internal Affairs noted that they have actively intervened to stop multiple fraudulent or dubias public procurements and that annually tens of millions of lei were falling into the pockets of corrupt employees. She praised the new interim prosecutor for his office’s cooperation and noted that many corrupt employees see the writing on the wall and are simply resigning.
The Interim Prosecutor General has his sights focused on corrupt judges and has requested permission from the Superior Council of Magistrates to prosecute 2 judges. One request was approved and the other is still being examined at the time of writing. The names and circumstances have not been reported.
Finally, the director of the National Anticorruption Center was fired this week. Director Ruslan Flocea was a holdover from previous governments and was determined not to have been fulfilling his job. He will be replaced by a new appointee from Parliament.
Ending on a High Note!
A mathematical discovery in Moldova! The Technical University of Moldova has announced that mathematicians Mihail Popa and Victor Pricop have solved the “Center and Focus” problem proposed by legendary French mathematician Henri Poincaré (1854-1912). According to the announcement, which you can read in English, this problem has been vexing international mathematicians for over 100 years. This seems like a very exciting bit of nerdy news for Moldova but I have to admit I can’t find anything online about this particular math problem. So if any intrepid readers can help provide some more context please leave a comment!!
Final Note: Next week is Thanksgiving and while that particular holiday is not among the many, many holidays recognized in Moldova (any country with 2 Christmases and 3 Easters needs to check itself a bit), I do observe Thanksgiving and will be taking a week off from Moldova Matters. If there is any major breaking news expect a short update but otherwise we’ll all be back together in 2 weeks time to catch up. Happy Thanksgiving!!
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!