Moldova rushes to plug itself into EU

By bne IntelliNews April 30, 2014

bne -


Moldova has set itself a target of entry to the European Union within five years and will do “everything possible” to achieve the goal, its prime minister said on April 30. He also confirmed his country will be plugged into European gas networks this year, as it hurries to seal ties to the West in the face of Russian pressure.

PM Iurie Leanca also confirmed Moldova will start receiving gas imports from neighbouring Romania by August, which will reduce Moldova’s dependence on supplies from Russia. Moscow has previously put pressure on Chisinau as it attempts to accelerate its drive towards EU membership. However, despite a Russian ban on Moldovan wine imports - the country's main hard currency earner - Chisnau has continued down the path towards Europe.

On April 29, Moldovans were granted visa-free travel to most countries in the EU. Speaking to journalists in the town of Sculeni on the Romanian-Moldovan border, Leanca admitted Moldova, currently Europe’s poorest country, has its work cut out. "We have an ambitious target but I consider that we can reach it: doing everything possible for Moldova to become a full member of the European Union when Romania will hold the presidency of the EU in 2019," he said.

Leanca told journalists said that gas exports from Romania will start this year, as work on the Iasi-Ungheni pipeline nears completion. While the pipeline will initially supply only southern Moldova, it is a step towards ending the country’s reliance on Russian gas. Currently, the country is fully dependent on Russian deliveries via Ukraine for its gas imports, but there are concerns Moscow could cut supplies as Chisniau prepares to finalise its EU Association Agreement in mid-2014. 

Russia may also choose to exert pressure by supporting the breakaway republic of Transnistria (also known as Transdniestria) in its attempts to secede from Moldova. In the wake of Russia's annexation of Crimea, tension has increased. The internationally unrecognized Transnistrian parliament voted on April 16 to appeal to Moscow for official recognition, followed by entry to the Russian Federation. 

However, after defying Russian pressure and initialling the Association Agreement with the EU at the Vilnius Summit in November, the Moldovan government has pushed ahead with plans for closer integration. Six countries in total were originally set to sign off on EU pacts. However, Russian pressure put off all but Moldova and Georgia. 

The failure of former Ukrainian president Viktor Yanukovych to push the deal through for his country sparked the protests that unseated him in February. The interim government in Kyiv signed off on the trade part of the agreement earlier this month, but Russia is thought to be encouraging the continuing crisis in Ukraine in a bid to derail any further movement to the west. Both Brussels and Washington have pledged financial support to Moldova as it struggles to complete the job.

Completion of the the Iasi-Ungheni gas interconnector, on which construction started in August, will provide further support. The EU is providing €7m of the €28m project cost. Romania is paying €12m for its section of the pipeline, and well as contributing €9m for the Moldovan section. When completed, the 43.3km pipeline will have annual capacity of 1.5bn cubic metres (cm). 

The country consumes around 3-3.5bn cm annually, but only 1bn cm goes to Chisinau-administered territory, with the rest taken by Transnistria, according to Anita Sobjak, analyst at the Polish Institute of International Affairs (PISM). Gas makes up almost 65% of the country’s total energy supply, and all of it is bought from Russian state giant Gazprom, at a price close to $400 for 1,000 cubic metres.

When the pipeline opens, "we will have better tariffs. This means we will see diversity and energy security,” Leanca told journalists, according to AP. Despite Romania’s willingness to export to Moldova, it also relies on gas imports from Russia to make up shortfalls. In 2012, Romania produced 10.9bn cm of gas, but consumption stood at 13.5bn cm. Bucharest is also supporting plans to build an extension to the Moldovan spur under construction that will carry gas to the Moldovan capital. 

Related Articles

Austria's Erste rides CEE recovery to swing to profit in Jan-Sep

bne IntelliNews - Erste Group Bank saw the continuing economic recovery across Central and Eastern Europe push its January-September financial results back into net profit of €764.2mn, the ... more

EU, US partly suspend Belarus sanctions for four months

bne IntelliNews - The Council of the European Union (EU) has suspended for four months the asset ... more

bne:Chart - CEE/CIS countries perform particularly well in World Bank's "Doing Business 2016" survey

Henry Kirby in London - Central and Eastern Europe and the Commonwealth of Independent States’ (CEE/CIS) countries performed particularly well in the World ... more