Weekly Roundup
September 17, 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!
Progress of the War
The last week has seen the most dramatic changes in the frontline since Ukraine won the Battle of Kyiv in April, with Ukrainian forces conducting a lightning offensive in the Kharkiv region. Russian forces were routed as their lines collapsed and soldiers fled in disarray leaving much of their ammunition and equipment behind. Ukraine has liberated a territory roughly the size of Rhode Island in a matter of days radically changing the strategic picture in the east as key Russian logistical hubs have been captured and what remained of the First Guards Tank Army completely destroyed.
Meanwhile, Ukrainian forces continue to press in the Kherson region and Russia seems unable to commit reserves in the east owing to major manpower limitations all along their lines. As with the Battle of Kyiv, when Russian forces retreat Ukrainian and international investigators move in and quickly discover mass graves and evidence of war crimes. All of this story has been widely covered in the international press so we will focus on the immediate ramifications for Moldovan security.
Russia has few friends… and increasing security concerns
Russian President Vladimir Putin had a largely humiliating week as he met with previously sympathetic world leaders in Uzbekistan where all the leaders in attendance turned the tables on Putin making him wait for them.
During the meetings, Putin received no public support from China and was publicly lectured on human rights from Narendra Modi (not a great look).
In a more concrete problem for Russia, clashes have broken out across Russia’s backyard with a resumption of fighting between Azerbaijani and Armenia as well as border fighting breaking out between Kyrgyzstan and Tajikistan. As the primary security guarantor in the region, Russia would normally play a role in mediating these crisis up to and including deploying “peacekeepers.” As of now, Russia appears to be stretched too thin to do much even as Armenia calls for aid under treaty clauses of the Collective Security Treaty Organization CSTO. Publicly and diplomatically “Moscow is silent.”
Ukraine’s offensive and Russia’s increasing lack of military capacity, with the vast majority of its army deployed in Ukraine, is rapidly re-writing the security environment in the region. Russia’s Imperial ambitions seem undiminished at least in rhetoric though. This week a Russian Federal Agency wrote posts about all the “People’s of Russia” identifying Moldovans as really Russian peoples but calling them “Italian Russians” due to their "melodious language" and love of wine. This did not go down well on Moldovan social media.
At the same time, Moldovan journalists and analysts are now writing clearly that Ukrainian gains in the east and the massive damage done to the Russian army mean that the Kremlin’s stated goals of creating a land bridge to Transnistria are now impossible. But while the immediate threat of being attacked is greatly diminished, Moldova is still looking warily to national defense.
Moldova Strengthening National Defense
This week US Secretary of State Antony Blinken announced a $2.2 billion dollars in military aid to countries threatened by Russia. $1 billion will be allocated to Ukraine with the rest split among regional countries including Moldova. The actually amount of support Moldova will get is not yet announced. Recall that the EU donated $40 million dollars of military financial aid to Moldova this year doubling the national defense budget. Moldova’s Minister of Defense says that this money will be used to strengthen the national defense and invest in reforms to the national army.
Meanwhile, Moldova will take part in the Rammstein group forum for the first time. The Rammstein group was formed in April as a monthly meeting of defense secretaries and government representatives from nations supporting Ukraine with military equipment. Each month Ukraine presents their needs and the forum works together to try and allocate equipment, money and other aid as needed. Moldova says that it will participate by highlighting the humanitarian support the country provides to Ukraine. At the same time, this is a military forum and Moldova’s participation is likely an outflowing of the financial support and investment coming into the national defense budget as Moldova considers what equipment it needs and who could potentially supply it.
In another signal that Moldova is thinking more strategically about defense, the Security and Information Service SIS has announced that they will formulate a curriculum for a new elective university level course in state security. It will focus on national threats such as disinformation, cyber security and more. Courses like this are a rarity in Moldova which has spent little time in the past 30 years thinking strategically about national defense.
Political Updates
This week a new political poll was released by the company iData showing the potential results were a parliamentary election to be held today. Here are the top line results:
Socialists - 20.8% (37 seats in parliament)
PAS - 19.4% (34 seats in parliament)
Shor - 16.7% (30 seats in parliament)
From this we can see major gains by the Socialist and Shor parties at the expense of the ruling PAS party. Elections are not scheduled until 2025 so unless the PAS party fractures and seeks new elections by itself these results are best seen as a barometer of public option after 1 year of the current PAS government. At a minimum, the poll shows major dissatisfaction with the leaders of the country. The poll did not ask issue questions but the most commonly cited complaints in the press are rising costs as well as disillusionment with the slow rate of reform promised by PAS last election.
Note: News outlet ZdG qualified the results noting that iData owner Mihai Bologan’s brother Viorel Bologan is a former deputy of the Socialist Party and that the survey was conducted with iData’s own money (somewhat uncommon in Moldova where polling firms like iData are usually contracted by local or international groups). iData is generally considered to be a high quality polling firm in Moldova and we have presented their polls in past election cycles without noting this political connection as it has not been publicly reported before. ZdG draws no conclusions from this connection but we feel it’s important to note as they did in the linked coverage.
More Rumblings of a Cabinet Reshuffle
This week Prime Minister Gavrilita further confirmed that a reshuffle in the cabinet of ministers was coming saying the following about her subordinates:
“There are those in the government who act quickly. But there are others who have less success in their field, and this is especially important in times of crisis. When a player gets tired, he needs to be replaced. By the end of September, we will draw conclusions and by winter we will update the composition of the Cabinet,”
Which ministers might be replaced, as well as more details on the timeline of the reshuffle are yet to be announced. The fact that the government is considering a reshuffle has been telegraphed since at least June but to date only the Minister of Agriculture has been replaced. The Minister of Ecology resigned last week following a verbal reprimand by the Prime Minister at a cabinet meeting but has yet to be replaced.
It was also announced this week that former Minister of Agriculture is under investigation by the National Integrity Agency which has found that he actively managed a company, drawing compensation, while working in the ministry. His company, founded in 2008, is active in the agri-business sphere. The law prohibits being compensated by a private company while working in government but as yet there are no accusations that he took decisions while in power to support his company. In any case, it is not a good look for the Gavrilita government.
New Parties in the Political Landscape
In spite of a strong performance in the iData poll above, the Socialist and Shor parties will face strong challenges in contesting any future elections. Igor Dodon remains under house arrest as his corruption trial in the Metalferos case begins this month. Nearly the entire leadership of the Shor party is under arrest except for Ilan Shor who remains in hiding in Israel. Furthermore, the Central Election Committee CEC has reported more findings of violations of campaign finance laws by the Shor Party and announced sanctions depriving the party of public funding for 6 months. This is unlikely to damage a party allegedly financed from the theft of $1 billion dollars from Moldovan banks, but shows the major legal headwinds facing the current opposition.
In light of the challenges these parties face, as well as the decline in popularity of the PAS party, we are seeing new political parties sprouting up like mushrooms. Bloggers, local mayors, a fugitive Romanian criminal fighting extradition - it’s open season in Moldova for unknown but ambitious people to start new parties and begin positioning themselves for next year’s local elections. Of the new parties, the only one that has generated much national attention is Chisinau Mayor Ion Ceban’s National Alternative Movement or MAN party which achieved 2.3% in the above iData poll.
Meanwhile, perennial candidate Renato Usatii has returned from his self-imposed political retirement to again take control of “Our Party” with a goal of leading it into local elections next year. Interestingly, immediately after announcing his return to politics, Usatii posted pictures of a meeting he had with US Ambassador Logsdon, supposedly at the request of the US Embassy. Speaking of the meeting Usatii noted that they discussed Moldova’s challenges, the state of the opposition and noted:
“I believe that not all problems in Moldova can be attributed to the crisis in the region and the war in the neighboring country. Until the Moldovan economy transforms into a manufacturing one, Moldova will not be able to become a strong state. It's time to stop standing with an outstretched hand and start working on financial independence,”
Mr. Usatii is something of a political chameleon who was the former mayor of Balti. Allegations of organized crime connections have dogged him for years related to a fortune he made doing business in Russia’s east related to “railroads.”
Analyzing the sudden boom in new party creation it is easy to see sharks circling the PAS camp. Most likely, opposition political parties, new and old, are looking less at next year’s local elections and more at the winter energy crisis wondering if economic pressures might force a collapse of the government and early elections.
The Saga of Air Moldova
Last week a series of political stories unfolded when the national airline - Air Moldova announced suddenly on September 9th that it would be resuming flights to Moscow on October 1st. Immediately commentators questioned whether this was actually possible since the EU has closed airspace to Russian bound flights and Moldovan airlines would need to fly over Romania and then take a route either over the Black Sea or through Poland and Belarus to get to Moscow. Speaker of Parliament Grosu immediately called the announcement “public manipulation and disinformation” noting that the company is still owned by criminals.
This is true, as Air Moldova may be the flagged national carrier but it is actually owned by unknown parties through shell companies. Just like the airport, Moldova’s duty free shops, most intercity bus stations and much much more, these companies are alleged to be owned by Ilan Shor, Mr. Plahotnuic or other fugitive oligarchs who privatized them while in power.
Responding to the news, Moldova’s Civil Aviation Authority announced it was banning flights to Russia citing EU regulations and safety concerns. Air Moldova is considering appealing in court.
Meanwhile, political messaging from the opposition started immediately with Igor Dodon responding from house arrest with one of his long talks about how this is proof that the Moldovan government is going to join EU sanctions against Russia. Meanwhile, a spokesmen for the Kremlin called the move "dictatorial” and also used the excuse to attack the Moldovan government.
Without going too far out on a limb it’s fair to say that this was an elegant political setup. Because of closed airspace Air Moldova likely had little chance of flying to Russia no matter what. But by announcing it and forcing the Moldovan government to push back they elegantly setup attacks by the Kremlin, Dodon and others that appealed directly to the Socialist party base - the only people who might think of flying to Russia in a time like this. So while nothing happened really but a lot of bluff and bluster we can see a fairly masterful political move that accomplished a few key things:
Appeal to the Base - Mr. Dodon could appeal to his pro-Russian base.
Distraction - the government was distracted dealing with an artificial problem
Discrediting of PAS - the PAS base is disillusioned with how slowly reforms, particularly justice reform, is going. Stories like this again highlight that the government does not control the airline, airport or other oligarchic held institutions and that they can continue to be used as a base of attack from those criminal oligarchs.
Economic News - A Quick Roundup
Here is a quick roundup of economic stories from the week:
Moldova announces the country’s first highway - Minister of Infrastructure Spinu announced that the government is planning to build the country’s first highway connecting Iasi (Romania) > Ungheni > Chisinau > Odessa. This project is in very early stages and the government is looking for financing. Romania is in the process of building highways from Budapest to Iasi with new roads slowly snaking their way across the country. If Moldova follows through on this plan then in some years it will be possible to drive on a highway from Odessa to Paris as Moldova finally gets connected to the EU’s road system.
Inflation at 34.27% - Inflation continues to climb ahead of winter. The National Bank still estimates a peak in Q3 at 34.7% and then a slow decline starting in Q4.
Trilateral Energy Cooperation - Moldova, Romania and Ukraine announced a new trilateral cooperation format as foreign minister and ministers of energy met in Odessa this week. The new mechanism will allow Romania to provide additional winter support to its neighbors while working longer term to align energy and electrical systems between the 3 countries.
Turning down the thermostat - Minister of Infrastructure Spinu has asked citizens to turn their thermostats down to 19C (66F) this winter in order to save energy. This message, and other energy saving ideas are now mandated to be broadcast in public PSAs 4 times / day on Moldovan TV channels.
Lemne.md launched - After the Prime Minister grilled the former Minister of Ecology about missed deadlines for the website (leading to the Minister’s resignation) the site has finally been launched. Individuals and local institutions can find their local distribution point for firewood as well as pricing, contact information and information about subsidies on the site. Priorities are given to public institutions that heat with wood fire stoves (schools, clinics, etc) and to households where this is their only method of heating.
A Standoff Over Gas (again) - A new deadline for when Russia *might* cut off gas supplies has been named as October 1st. In responding to the news, Prime Minister Gavrilita again assured the public that Moldova can get gas from alternate sources but spoke forcefully to Transnistria noting that if Moldova gets cut off from gas, so will Transnistria. In this event, Transnistrians will have to buy gas with advance payments to Chisinau at market prices. Russia has a fine line to walk here and Moldova is skillfully playing a limited hand going into the cold season.
Ending on a High Note!!
Moldovan athletes Anastasia Nikita, Irina Ringach and Mariana Dragutan won 1st, 3rd and 5th places respectively a the world wrestling championships in Belgrade this week! Anastasia Nikita is now the world champion in the 59kg weight class. Go Moldova!!
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There may be a connection between roads and defense (efficient troop movement) so maybe some of the military aid will go to improving the not-quite-highways. My Moldovan friends used to make that "pocketing" gesture when the saw news about foreign aid for roads, but it's a new administration & a new day.
My other comment - the difference between an inter-city bus terminal (a few urban streets with buses parked along them and drivers/touts standing outside announcing destinations) and the airport with its mysterious VIP lounge taking up half the terminal is a good object lesson in oligarchy, if Shor truly owns them all. (As an alternative, here in the U.S. we have public port authorities; don't know the history of that kind of infrastructure.)