Weekly Roundup: Moldova Attends the Ukraine Peace Summit
June 22, 2024
Moldova Reaffirms Support for Ukraine at Switzerland Peace Summit
President Sandu attended the Ukraine Peace Summit held in Switzerland last weekend where she spoke about Moldova’s support for Ukraine saying:
“We are here today to talk peace. We all want peace. But what truly defines peace? We know for sure what peace is not. Peace is not capitulation to the aggressor. Occupation of parts or entire countries is not peace and can never be the foundation for peace. …
In closing, let me be clear: Ukraine's peace is Moldova’s peace —and, in this interconnected world, global peace cannot exist without it. Only by standing together, across continents, can we secure a peaceful future for all. ”
Read President Sandu’s remarks in full here (English).
*Correction: An original version of this article had errors in the translation of the President’s remarks. It has been updated to reflect a better translation and to link to the full remarks in English.
At the summit, 78 countries and international organizations, including Moldova, signed the joint communique expressing support for Ukraine. Multiple large countries chose not to sign the communique including India, Saudi Arabia, Thailand, Mexico, Brazil and others. Russia and China did not attend the event.
The communique itself was not as strong as Ukraine wanted. Of the 10 point Ukrainian Peace Plan, which outlines Ukraine’s formula for ending the war, the summit supported only 3 points: the importance of nuclear security, including the withdraw from nuclear power plants, the importance of global food security and illegality of attacking food infrastructure and the importance of a full return of Ukrainian prisoners of war and kidnapped citizens.
The communique also reaffirmed existing UN General Assembly resolutions demanding the complete withdrawal of Russian troops from Ukraine.
Speaking at the summit President Sandu expressed greater support for Ukraine than the limited communique, including the restoration of all Ukrainian territory and Moldova’s support of Russia paying war reparations. The President also discussed Russia’s hybrid threats against Moldova and the need for increasing national resiliency.
National Security News
Here’s a rapid fire roundup of the top security stories of the week:
Debunking the “militarization of Moldova” narrative. Ilan Shor and other Russian affiliated politicians have been pushing a narrative that Moldova is preparing for war. Examining this, journalists from ZdG wrote a breakdown of Moldova’s growing but still anemic military budget. Moldova’s military is currently working on a modernization plan that envisions a “capable defensive force” by 2030. As part of that plan military spending is targeted at 1% of GDP but it is not close to that number right now. In 2024 spending is projected to be 0.65% of GDP or $110 million dollars. That is up from 0.5% of GDP last year and an average of 0.3% in the decade before 2022. Around half of the military budget is spent on salaries and no major equipment purchases are planned in 2024. Most of the new spending will be on upgrading base infrastructure and constructing a new military base and training ground near Bacioi. Moldova’s current military budget is equivalent to the cost of around 3 American F-16s or a little over half the price of one F-35. It’s fair to say that the country is not preparing for an offensive war.
Transnistria accuses Chisinau of unregistered aircraft flights in the security zone. The accusation states that small aircraft flights are not coordinated with the peacekeepers and claims that Moldovan and American soldiers have conducted parachute jumps “close to” the security zone. The Bureau of Reintegration says that they have no records of any flights in this area. Military exercises with parachute jumps were conducted in past months but not near Transnistria.
Political News
Here’s a rapid fire roundup of the top political stories of the week:
President Sandu signed a decree on initiating accession negotiations with the EU. The President appointed Deputy Prime Minister for European Integration Cristina Gherasimov as the lead negotiator. The first Moldova-EU Intergovernmental Conference will take place on June 25th.
The Venice Commission has approved Moldova’s electoral reforms which created voting by mail. The Commission noted that limited territorial scope for the plan is reasonable given that it is a pilot program and recommended that Moldova make voting by mail permanent if the pilot is successful. Regarding the fact that these amendments were passed 5 months before an election the Commission stated that this fact “does not violate the principle of stability of electoral legislation.” This most likely signals the end to any ongoing legal challenges against voting by mail.
Moldova holds the largest ever Pride March. Last Sunday’s march saw 800 people in attendance including 2 MPs (unnamed) and the representatives of many diplomatic missions. Press covering the event noted that this year showed an increasing trend of older marchers, particularly parents coming to support LGBTQ+ children. Around 100 counter-protestors were prevented by police from disrupting the march. Members of the youth wing of Ilan Shor’s Pobeda (Victory) block dressed in hazmat suits and followed around a block behind the marchers “disinfecting” the streets after them.
Anti Corruption Prosecutor Dragalin has refused a request to answer questions in parliament. The prosecutor had been requested by the Parliamentary Legal Committee to answer questions, either in person or in writing, about her letter which led to the resignation of Tatiana Raducanu from the Pre-Vetting and Vetting Commissions. In her letter of refusal, Dragalin said that the request to testify had a “shade of political control” and said that "Politicians should refrain from giving orders to the justice system."
A controversy at the Luceafărul Theater. Romanian director David Schwartz has claimed that his production of a play called "Invizibil" was indefinitely postponed due to political interference by the PAS party amounting to censorship. He alleges the that theater canceled the production following a call from Angela Brașoveanu, Presidential Advisor in Culture and Inter-Ethnic Relations, to the theater’s artistic director Veaceslav Sambriș. The theater responded that this is untrue and that the play, which is said to highlight “Invisible” voices in monologues about corruption in Moldova, caused many actors to feel uncomfortable and the costume director to quit after reading the script. The theater released a statement saying that the play promoted Russian narratives including that "Ukraine is to blame for this war; Ukraine must cede territories to Russia for the sake of ending the war; if Russia did not attack Ukraine, Ukraine would attack Russia; Russia only wants to return its historical territories; Romanian speakers from the Republic of Moldova are to blame for the war in Transnistria [because they discriminate against Russian speakers- clarification ZdG]." According to Veaceslav Sambriș, problems occurred when a lead actress took a sick leave saying that she had a nervous breakdown due to stress and anxiety from dealing with the director and that she felt “I have to say things on stage that do not represent me and I do not agree with them. (…) I could see that we were manipulating the viewer and that is not right." Veaceslav Sambriș says the Presidential Advisor Angela Brașoveanu did call him to ask about rumors tensions surrounding the play but that it was "just to ask what happened" and that they have known each other for a very long time. He stated that David Schwartz knew this and has deliberately mischaracterized the situation in order to claim censorship. PAS representatives stated that no one is attempting to censor a play and generally denied the director’s characterization of the situation.
The Ministry of Health has announced that 50 new cases of measles were reported in the last 3 weeks. This brings the total number of cases in 2024 up to 117. The Ministry stated that the outbreaks are concentrated among a group large families who have not vaccinated their children for religious reasons.
Crime, Corruption and Ilan Shor
Here’s a rapid fire roundup of the top stories about corruption and justice of the week:
Moldova will auction off 2 of Ilan Shor’s cars which were seized as part of criminal prosecutions. The cars are a Bentley Continental and a restored GAZ 2410. The auction will be held in early July.
Bashkan Gutsul’s case was once again delayed in court. Last week the case was delayed because the Bashkan’s co-defendant Svetlana Popan called in sick and Gutsul reported that her lawyer went on vacation. This week the Bashkan’s lawyers stated that now she is sick and recuperating at home. Svetlana Popan’s lawyers missed the court appointed deadline to provide proof of her illness stating that they didn’t know they were required to do so (despite this requirement and deadline being widely reported in the press and told to them explicitly). The judge demanded to know if the Bashkan has documentation of her illness or if she went on official sick leave - a question which her lawyers had no response to. The judge told the defense that they must provide proof of illness and warned them that “unjustified absences” could result in defendants being forcefully brought to court.
RISE Moldova has uncovered a “number portability scheme” benefiting Plahotniuc. In June 2011, then Minister of Information Technologies and Communications Pavel Filip initiated the process of number portability in Moldova. Under new regulations people who changed their phone provider could bring their phone number with them to the new company. As part of this new process the government initiated a public competition for a company to manage a centralized database to facilitate portability between companies. This competition was won by Lithuanian company Mediafon UAB, part of a group of companies called MG Baltic (MG Baltic later changed its name to disassociate itself from the largest corporate corruption scandal in Lithuanian history). Under this system phone companies paid Mediafon UAB’s Moldovan subsidiary an average of 172 euros every time a number was ported between telecoms and an additional yearly maintenance fee. RISE tracked around 15 million euros of transactions to this company between 2012 and 2020 and showed that 7 million euros of these fees were funneled into a Cyprus based offshore company owned by Plahotniuc. The payments to Cyprus stopped in 2021 when the Lithuanian partners took full control of the Moldovan subsidiary in a court action. Neither the Lithuanian company nor Plahotniuc commented on the story or provided information about who is currently benefiting from these fees. Commenting on the story, the director overseeing Moldtelecom stated that "Moldtelecom has already paid this company a total sum of about 5.7 million euros for practically non-existent services." The costs of this scheme were passed on to phone users through their bills as general company costs since companies don’t charge for porting numbers in order to attract new users. Essentially, Plahotniuc was able to keep defrauding every phone user in Moldova years after he fled the country.
Economics and Infrastructure
Here’s a rapid fire roundup of the top economics and infrastructure stories of the week:
The Constitutional Court has overturned changes to the airport leasing mechanism on procedural grounds. The ruling came as a result of the Socialist Party appealing legislative amendments that placed the airport on a list of “non-privatizable state assets.” Parliament passed the amendments because existing legislation allows assets included in this list to be leased out for a contract period of 5 years rather than the standard 3 years. This change was intended to attract new bidders. The court ruled that the amendments were improperly included in a second reading of the legislation and should have been more broadly consulted and subject to a further vote. Due to the setback of the ruling it is likely that the latest attempt to find a concession company to manage the airport’s food and retail vendors will be canceled (again).
British financial services company Revolut announced changes that will effectively remove it from the Moldovan market after 1 year of operations. The UK company operates the “Revolut Lite” app in Moldova and other nations which allows people to send and receive money between users. Revolut announced the cancelation of the “Lite” version of the app and a focus only on the main Revolut app which has additional features including currency conversion and the ability to make some investments. The “Lite” version had previously been part of their strategy to enter markets where regulatory issues prevent the operation of their full app. The Ministry of Economy had previously lobbied hard to bring Revolut to the Moldovan market. Users will still be able to seamlessly transfer money using the new MIA government run system. Revolut has not provided any timeline on when they will introduce the full app to the Moldovan market.
The World Economic Forum ranked Moldova 5th globally in terms of Economic Gender Parity. The country received a score of 83.7% of full economic gender parity. Overall Moldova ranked 13th in global gender parity, one place ahead of the UK at 14 and well ahead of the United States which ranked 43rd.
The Ministry of Energy announced a pilot program for differentiated energy prices. Under the new plan pricing would vary according to higher demand times with half rate tariffs in the hours of midnight until 6 am, 6 am - 11 am 1.2x tariff, 11 am - 4 pm standard price and 4 pm - midnight 1.2x. The plan will be piloted in parallel with a new rollout of smart meters and extended as the number of smart meters increases.
Minister of Infrastructure Spinu announced the completion of the new Leova-Bumbata border checkpoint. The new border crossing to Romania has room for processing 100 trucks and included the construction of an access road and bypass road around Leova. The crossing itself is still a temporary pontoon bridge as construction of a permanent bridge will come later. This crossing was built to help facilitate the massive increase in freight traffic passing into and through Moldova from Romania since the start of the war.
The census has uncovered 284,000 unregistered homes in Moldova. This represents a 21% increase in Moldova’s known housing stock. Most unregistered houses were discovered in villages in the north of the country, but “thousands” were also found in major cities and towns. Expert Veaceslav Ionita from the think thank IDIS used the data to estimate Moldovan household wealth to be at least $4.4 billion dollars higher than previously thought.
The Ministry of Energy has proposed tax incentives for renewable energy (Author’s Note1). The proposal would exempt income from household solar panels from taxation, set an 8% VAT rate on heat pumps and exempt bioethanol fuels from excise taxes. Currently Moldova produces 20,000 tons of ethanol per year which is nearly all exported. At the same time the country imports 907,000 tons of automotive fuels. In the EU an average of 6.8% of a tank of gasoline is ethanol (10% in the US). Moldova had targeted 10% ethanol content by 2020 but never made any progress on this. The Ministry of Energy hopes to promote this industry and cut down Moldova’s foreign fuel dependence.
The Ministry of Finance presented a draft fiscal policy for 2025. In it they accepted the Ministry of Energy’s exemption of income taxes on green energy proceeds. They also propose elimination of income tax on the sale of a car owned for more than 3 years and from the proceeds of government bonds. They also propose an increase in the standard income tax exemption of 10% and a new mechanism for public companies to issue stock options.
Author’s Note: This proposal is a pretty big deal in Moldova not in substance but in the approach it represents. Moldova has previously used tax policy to shelter some companies and industries within industrial parks (e.g. IT Parks Law). The country very rarely attempts to use tax policy as incentives for economic outcomes. Rather than pass a tax cut to stimulate investment (e.g. in heat pumps) the Moldovan government typically opts for the far more bureaucratic option of creating grants or voucher programs. The fact that a ministry is talking about using taxes in order to spur private sector investment is new. The possibility that the Ministry of Finance will not accept these proposals is not.