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New Government, Old Challenges – Political and Economic prospects for Moldova in 2020

On 12 February 2020, the Berlin Policy Hub at the Institut für Europäische Politik (IEP) organized a round table discussion on the political and economic prospects for Moldova in 2020 as well as the challenges that the new Moldovan government is facing.  Three Moldovan experts were invited to share their insights: Iulian GROZA, Executive Director, Institute for European Policies and Reforms (IPRE), Adrian LUPUȘOR, Executive Director, Expert-Grup as well as Stanislav GHILETCHI, Deputy Executive Director, Institute for European Policies and Reforms (IPRE). The expert state­ments were comple­mented by a commentary from Dr Tobias TUNKEL, Head of Division for Russia, Belarus, Moldova, CIS; EU External Relations with Eastern Europe, Southern Caucasus, Central Asia including the Eastern Partnership and the Black Sea Cooper­ation at the German Federal Foreign Office.

After intro­ductory remarks by Dr Funda TEKIN, Director at IEP, the ground was prepared for a fruitful discussion, moderated by our colleague Dr Cristina GHERASIMOV, Research Associate at the Robert Bosch Center for Central and Eastern Europe, Russia, and Central Asia of the German Council on Foreign Relations (DGAP).

Where does Moldova stand with regard to its good gover­nance reform process?

After the break-up of the tactical coalition between the ACUM alliance and the Socialist Party in November 2019 over the appointment procedure for the Prose­cutor General, a new “techno­cratic” government was estab­lished by the Socialist Party. 90 days into the  government, the overall perception is that reform processes which were initiated under the previous government are not continued with the same speed or even put on hold. The Moldovan government is declaring to pursue a “new balanced foreign policy”, a narrative that the President of the Republic of Moldova, Igor Dodon, is promoting. This approach would imply a more balanced relation between Moldova and the European Union as well as with Russia. In fact these relations could be considered as rather unbal­anced as the orien­tation of the new government seem to be much stronger towards Moscow than to Brussels. The Moldovan government is furthermore declaring that it is continuing to pursue the imple­men­tation of the Associ­ation Agreement. However, according to the experts from Moldova, these decla­ra­tions are not yet followed by concrete actions. Within the justice sector reform, a re-shift to an internal reform process could be observed. This is conducted without the initially foreseen support of external experts that would assess the perfor­mance of judges and prose­cutors. The lack of trans­parency of the process of internal evalu­ation entails the risk of political interests influ­encing this process. The cooper­ation with the Council of Europe Venice Commission should be improved including a better ex-ante consul­tation process on the legislative initia­tives in the justice sector. One of the major issues of concern is the increasing power concen­tration around the President, a fact that contra­dicts the consti­tu­tional provi­sions that foresee repre­sen­tative functions of the President. As the Moldovan government is mainly composed of former advisors of the president, they seem to follow the prior­ities that the president is setting.

What are the key economic challenges for the year 2020?

As regards the economic challenges the speakers were worried that the overall political and economic condi­tions would deteri­orate in 2020. Fiscal effects that have been beneficial in 2019 will not endure in 2020. The estimated budget deficit of 3,4 % of the GDP could be considered as compa­rably high. Exports to the EU are declining and the migratory pressure is increasing. There are risks related to the ambitions to renego­tiate condi­tions of the IMF agreement as well as related to the planned issuance of Eurobonds. The central bank’s indepen­dence is threatened by ideas put forward by the President and government to use profits of the central bank to reduce the debt burden from the “billion dollar theft”. Other means of budget consol­i­dation such as priva­ti­zation processes are also linked with severe risks of political exploitation before the presi­dential elections.

The German view on the challenges and prospects for the year 2020

It was highlighted that the new Moldovan government will be measured not by its decla­ra­tions but by its deeds. The expec­ta­tions within the European Union are clear, as regards the contin­u­ation of the reform processes the principle of “more for more” and “less for less” is applied. It is expected that in the field of Judicial Reform the Moldovan government continues to cooperate with the Venice Commission of the Council of Europe. Overall the following three “Cs” are guiding the German and European assis­tance policy towards the Republic of Moldova: 1. Condi­tion­ality, 2. Civil Society, 3. Communication.
Within the concluding discussion it was highlighted that in the short run, there might be a formal­i­sation of the currently still informal coalition with the Democ­ratic Party, which might come along with a reshuf­fling of the current government. Another major test case for the Republic of Moldova will be the Presi­dential elections in November 2020 for which Igor Dodon and Maia Sandu are currently the most popular possible candidates.

The Berlin Policy Hub is part of the “Europeanization beyond process” initiative supported by the Open Society Foundation and aims to intensify exchanges between Eastern European think tanks and their German counter­parts and to facil­itate new forms of cooper­ation. The project gives researchers from Georgia, Moldova and the Ukraine the oppor­tunity to present their expertise and research results to a German audience, while at the same time gaining a better under­standing of the discourse within Germany on these topics.