Moldova at 25: divided we fall

Moldova at 25: divided we fall
Polls show a rift between those Moldovans who want Euro-Atlantic integration, and those who want to remain within the Russian sphere of influence.
By Clare Nuttall in Bucharest August 27, 2016

Moldova, 25 years old on August 27, is a state fundamentally divided over where its future lies and even what it means to be Moldovan. The failure by successive governments to build a sense of nationhood has left Moldova vulnerable to capture by local oligarchs and pressure from international actors.

That Moldova is a fragile state is perhaps not surprising given that when it first declared its independence from the Soviet Union back in August 1991, few thought it would remain independent for long. The state itself was a Second World War construct of the former Romanian province of Bessarabia bolted onto the tiny autonomous Moldavian ASSR that was formerly part of the Ukrainian SSR.

At the time, the expectation was that Moldova would unite with neighbouring Romania, almost re-creating the Greater Romania of the inter-war years. This, however, was not acceptable to the substantial minority of Russians and Ukrainians concentrated on the industrialised eastern bank of the Dniester river. Shortly before Moldova’s split from the USSR, Transnistria, the tiny sliver of land between the river and Moldova’s border with Ukraine (broadly equating to the Moldavian ASSR), declared its independence.

Ever since then, Moldova has been divided, with Moscow propping up the regime in Transnistria, and using the threat of official recognition for the separatist republic as a lever to pressure Chisinau. Another region, Gagauzia, is also largely autonomous and favours close ties with Russia.

Moldova is not just physically divided. Successive polls have shown a rift between those Moldovans who want Euro-Atlantic integration, in particular EU membership, and those who want to remain within the Russian sphere of influence. While one side then the other is in the ascendant, usually the split between those who want to join the EU and those who would prefer to see Moldova as part of the Moscow-led Customs Union is around 50/50.

According to Natalia Otel Belan, deputy regional director, Eurasia and South Asia at the Center for International Private Enterprise (CIPE), Moldova’s identity crisis goes beyond the question of what direction the country should go in, to the heart of what it means to be Moldovan.

“Moldova’s citizens are pulled in different directions, they are lost, but it goes deeper than that. The reason there is no direction is that there is no national unity, no one nation concept. For 25 years politicians have tried to play with this idea, but Moldova still does not have an identity or clear set of values,” Belan says.

She believes this is dangerous for Moldova. The theft of the $1bn [in bank frauds] is partly because “the elite in charge of the country does not put a lot weight on fundamental values like honesty, loyalty to the country and respect for its citizens”. In addition, politicians like pro-Russian Socialist Party leader Igor Dodon have tried to answer the question of Moldovan identity “in dangerous ways”.

Moldova was not the only post-Soviet state to grasp - or perhaps be thrust into - independence without a clear national identity. Many of the Central Asian and Caucasian states had their borders deliberately drawn to mix up different ethnic groups in a divide and rule policy from Moscow, and their large Russian minorities further complicated the issue. Kazakhstan and Ukraine in particular had large concentrations of Russians in areas bordering Russia. Belarus arguably had an even bigger challenge of creating a national identity than Moldova did.

There has been some progress in Moldova over the last 25 years. Surveys that once showed most Moldovans describing themselves as either “Romanian” or “Russian” now have more people who claim to be “Moldovan”.

State capture

However, Moldova remains a weak and vulnerable state - in its 2015 Fragile States Index the non-partisan organisation Fund for Peace puts Moldova in its “Warning” category - and this together with the continuing lack of identity has created an environment where a small group of oligarchs have been able to capture the state.

State capture is not a new problem in Moldova - back in 2000, a World Bank study found that Moldova had the second highest level of state capture after Azerbaijan. However, rivalry between different oligarchs at least created some kind of balance within the country. This all changed in October 2015, when Vlad Plahotunic, who allegedly controls Moldova’s judicial system, effectively won the war of the oligarchs by having his main rival, former Prime Minister Vlad Filat, arrested. Plahotnuic is the backer of the senior ruling Democratic Party and coordinator of the current coalition.

Plahotnuic’s pre-eminent position changes the situation, since one man now has control over most institutions in Moldova - in addition to the parliament and the judiciary, he also has several media holdings. Observers agree that state capture and the associated problem of weak state institutions are the biggest problems faced by Moldova today and if left unchecked is likely to lead to further erosion of the state.

“The systemic corruption, in parallel with huge political corruption and dependent manifestations of ‘state capture’ weaken seriously the basis of the state. Indeed, we talk about a ‘weak state’ which is heading into the direction of ‘failed state’,” warns Denis Cenusa, associated expert at think tank Expert-Grup. “The further escalation of ‘state capture’ can provoke social-political turmoil in which the main loser will become the state institutions that will [lose their representative capacity], affecting the democratic form of governance.”

This is by no means the only problem facing Moldova. The poorest country in Europe, its economy is expected to grow very slightly this year, after contracting in the second half of 2015. The banking sector is in crisis after the thefts of $1bn (around 10% of Moldova’s GDP) were uncovered in early 2015. Having failed to recover the money, the government now wants to issue 25-year bonds to cover the costs, which means that Moldovan taxpayers will be paying for the stolen money until after 2040.

Cutbacks have been made within the administration this year, as Moldova struggled for months to find the funds to finance its budget. There is a freeze on hiring and all but essential public procurement has been put on hold.

Socially, the departure of an estimated 600,000 of Moldova’s 3.5mn population to seek work abroad is taking its toll. Divorce rates are high among migrants, and a 2015 study by the Migration Policy Institute says around 100,000 children have been left behind by migrant parents. Around 22% of these children do not attend school, and there are reports of high incidence of psychological problems, drug abuse and juvenile delinquency, thus storing up problems for another generation of Moldovans.

Even given the political will to address these problems (which is questionable) recent governments have been too fragile and short-lived to achieve much. In 2014, Moldova took the decisive step of signing the EU Association Agreement but there has been little progress on the reforms needed to move closer towards the EU since then. A large part of this is not just government instability, but because reforms are not in the interests of the oligarchs behind the ruling parties.

“Any government in Moldova could be capable to move effectively towards the EU, but with the price of stopping actions to facilitate, protect and promote the oligarchic interests. The political will is one of the main obstacles in advancing the reform agenda,” says Cenusa.

The switch back to direct presidential elections, announced by Moldova’s constitutional court earlier this year, is being touted as a way to resolve the issue of short-lived ineffective governments. However, observers are sceptical about both the motivation for the change, and whether it will have any positive impact on the situation.

Bleak future

“The presidential elections came about as a way to distract citizens who were angry and frustrated with the lack of progress on the big problems Moldova is facing - weak rule of law and the increasing capture of state institutions,” says Belan. “Even if whoever wins is a genuine pro-EU reformer, I don’t think they will be able to address these big issues because the parliament and other state institutions are part of the system that created the problems of corruption and state capture.”

Cenusa warns that, “All institutions in Moldova are vulnerable in front of powerful oligarchic interests, so we can expect that sooner or later the presidency can have an experience similar to the parliament, executive power or lower level institutions … overall, the idea of direct presidential elections constitutes a solution, but the Moldovan context can modify it if the depoliticisation and the phenomenon of the ‘state capture’ are not counteracted.”

Four candidates, including Dodon and former Prime Minister Iurie Leanca, have said they will stand. Dodon has consistently been ahead in the polls, while second and third place have typically been held by two pro-EU opposition figures - former Education Minister Maia Sandu and Adrian Nastase, the leader of Dignity and Truth, a new party that grew out of mass anti-corruption protests in 2015. The two parties together with the Liberal Democratic Party of Moldova are expected to pick a single candidate - most likely Nastase or Sandu - to give them the best chance of beating Dodon in the second round of voting.

With elections coming up in first Moldova then Transnistria this autumn, more interference form Russia is virtually inevitable.

A report from the Institute for the Study of War public policy research institute warns that Russia could decide to try and destabilise Moldova in the run-up to the election to prevent a strong pro-EU president being elected. Prime Minister Pavel Filip has been increasingly outspoken against Russia, slamming recent military drills in Transnistria and stressing the country’s western orientation in a post for the US Congress blog. Moldova also moved in July to restrict broadcasts of Russian television - another step threatening Moscow’s interests in the country.

“Russia could move to destabilise Moldova prior to its October 30 elections by stirring social unrest or even escalating to civil conflict or civil war as a means of justifying intervention by Russian forces in Transnistria,” the report says. “Russia can achieve this through use of pro-Russia political parties within Moldova, overt political pressure, and its conventional and proxy military forces in Transnistria.” It also points out that Russia has already “caused civil discontent in and ultimately invaded” first Georgia then Ukraine for similar reasons.

For their part, pro-EU politicians from both government and opposition are reaching out to the West, some from genuine desire to seek help with reforms, others more because the EU and other western institutions are the most likely source of financial support. The decision by Romania to disburse the first tranche of a €150mn budget support loan and the International Monetary Fund (IMF) agreement to sign a deal with a loan attached come in advance of the elections and could sway some voters. However, the IMF deal is dependent on Moldova resolving the bank fraud issue, which is unlikely to happen any time soon.

In many ways the future for Moldova looks bleak. A poor and tiny state, to a growing degree captured by an oligarchy whose interests do not align with the majority of the population, torn in two by opposing geopolitical forces. Whether this process of capture is consolidated in the upcoming elections by a victory for the ruling coalition’s candidate will be revealed in October. But there is still scope for opposition, as shown by the emergence of genuine opposition forces in the last two years - Dignity and Truth and Sandu’s Party for Action and Solidarity. Moreover, a growing number of Moldovans are still angry about the bank frauds and the lack of reform, and have been ready to take to the streets in huge numbers.

“It seems to me that Moldova is not completely captured; Moldova is on the cusp,” says Belan. “The presidential elections and events over the next few months - specifically how Moldova addresses the issue of the stolen billion - will show the direction the country is going in.” How events unfold in the coming months could therefore determine whether Moldova has any hope remaining for a better future.