Republic of Moldova
Area: 33,843 sq. km. (13,000 sq. mi.); slightly larger than Maryland.
Terrain: Rolling steppe, gradual slope south to Black Sea.
Climate: Moderate winters, warm summers.
Time Zone: GMT+2
Nationality: Noun--Moldovan(s). Adjective--Moldovan.
Population (January 2008): 4.2 million, excluding the estimated Transnistrian population of 533,000. An estimated 750,000 work outside the country.
Population growth rate (2007): -0.3%.
Ethnic groups (2004 census): Moldovan (83.7%), Ukrainian (6.6%), Russian (1.7%), Gagauz (4.5%), Bulgarian (1.7%), Romanian (1.4%), other (0.4%).
Main religions: Christian Orthodox (93.3%), Baptist (1%), Adventist, Roman Catholic, Jewish.
Languages: Romanian (officially known as Moldovan), Russian, Ukrainian, Gagauz.
Health: Infant mortality rate--11.1/1,000. Life expectancy--68.4 years.
Work force (1.3 million): Agriculture--41%; industry--12%; other--47%.
Constitution: Adopted July 28, 1994.
Independence: August 27, 1991 (from Soviet Union).
Branches: Executive--President (head of state), Prime Minister (head of government), government (cabinet). Legislative--unicameral Parliament. Judicial--Supreme Court.
Administrative subdivisions: 32 counties (raions), 4 municipalities, and one autonomous territorial unit.
Political parties: Communist Party, Christian Democratic People's Party, Our Moldova Alliance, Democratic Party, Social Liberal Party, Social-Democratic Party and the Party for Social Democracy.
Suffrage: Universal at 18.
GDP (2007 preliminary): $4.5 billion ($3.4 billion in 2006; $2.9 billion in 2005; $2.6 billion in 2004).
GDP real growth rate (2007): 3.0% (4.8% in 2006; 8.6% in 2005; 6.5% in 2004).
Per capita GDP (2007): $1,259 ($950 in 2006; $890 in 2005; $766 in 2004; $540 in 2003).
Natural resources: Lignite, phosphates, gypsum, arable land, and limestone.
Agriculture: Products--vegetables, fruits, wine and spirits, grain, sugar beets, sunflower seeds, meat, milk, eggs, tobacco, walnuts.
Industry: Types--processed foods and beverages, including wine and refined sugar; processed fruit and vegetable products, including vegetable oil; dairy and meat products; tobacco items; metal processing and production of machinery; textiles and clothing, shoes; furniture.
Trade (2007): Exports--$1.342 billion (of which 50% went to the EU countries and some 40% to the former Soviet Union): textiles, clothing, foodstuffs, wine, and machinery. Major markets--Russia, Romania, Ukraine, Italy, Germany, and Belarus. Imports--$3.690 billion (of which 45% came from the EU countries and 36% from the former Soviet Union): gas, oil, coal, steel, machinery and equipment, chemical products, textiles, foodstuffs, automobiles, and other consumer durables. Major suppliers--Ukraine, Russia, Romania, Germany, Italy, and China.
Currency: Moldovan Leu (plural Lei).
Exchange rate: Leu/US$ (2007): average 12.13; 11.32 (end of year 2007); 13.13 (average in 2006); 12.60 (average in 2005); 12.33 (average in 2004); 13.94 (average in 2003).
PEOPLE AND HISTORY
Ethnic groups represented in Moldova include Moldovan/Romanian, Ukrainian, Russian, Gagauz, and Bulgarian. Romanian (officially known as Moldovan) is the official language; Russian, Ukrainian, and Gagauz also are spoken. The great majority of Moldova's population is Christian Orthodox--90% of the population nominally belongs to one of the two main Orthodox denominations. The Moldovan Orthodox Church, an autonomous diocese of the Russian Orthodox Church and loyal to the Patriarch of Moscow, has 1,281 component parts, including churches, monasteries, and other buildings; the Bessarabian Orthodox Church, affiliated with the Romanian Orthodox Patriarchate in Bucharest, has 309 component parts. In addition, followers of the Old Rite Russian Orthodox Church (Old Believers) have 15. The government does not seek out or record the number of adherents of religious organizations.
The Republic of Moldova occupies most of what has been known as Bessarabia. Moldova's location has made it a historic passageway between Asia and southern Europe, as well as the victim of frequent warfare. Greeks, Romans, Huns, and Bulgars invaded the area, which in the 13th century became part of the Mongol empire. An independent Moldovan state emerged briefly in the 14th century under celebrated leader Stefan the Great but subsequently fell under Ottoman Turkish rule in the 16th century.
After the Russo-Turkish War of 1806-12, the eastern half of Moldova (Bessarabia) between the Prut and the Dniester Rivers was ceded to Russia, while Romanian Moldavia (west of the Prut) remained with the Turks. Romania, which gained independence in 1878, took control of Russian-ruled Bessarabia in 1918. The Soviet Union never recognized the action and created an autonomous Moldavian republic on the east side of the Dniester River in 1924.
In 1940, Romania was forced to cede Bessarabia to the Union of Soviet Socialist Republics (U.S.S.R.), which established the Moldavian Soviet Socialist Republic by merging the autonomous republic east of the Dniester and the annexed Bessarabian portion. Stalin also stripped the three southern counties along the Black Sea coast from Moldova and incorporated them in the Ukrainian Soviet Socialist Republic. Romania sought to regain Bessarabia by joining with Germany in the 1941 attack on the Soviet Union. On June 22, 1941, German and Romanian troops crossed the border and deportations of the Jews from Bessarabia began immediately. By September 1941 most of the Jews of Bessarabia and Bukovina had been transported in convoys and force marched to concentration camps in Transnistria. About 185,000 Jews were in the Transnistria area in concentration camps by 1942 in abysmal conditions. Very few were left alive in these camps when the Soviets reoccupied Bessarabia in 1944.
In September 1990, the Supreme Soviet elected Mircea Snegur as President of the Soviet Socialist Republic of Moldova. A former Communist Party official, he endorsed independence from the Soviet Union and actively sought Western recognition. On May 23, 1991, the Supreme Soviet renamed itself the Parliament of the Republic of Moldova, which subsequently declared its independence from the U.S.S.R.
In August 1991, Moldova's transition to democracy initially had been impeded by an ineffective Parliament, the lack of a new constitution, a separatist movement led by the Gagauz (Christian Turkic) minority in the south, and unrest in the Transnistria region on the left bank of the Nistru/Dniester River, where a separatist movement declared a "Transdniester Moldovan Republic" in September 1990. The Russian 14th Army intervened to stem widespread violence and support the Transnistrian regime which is led by supporters of the 1991 coup attempt in Moscow. In 1992, the government negotiated a cease-fire arrangement with Russian and Transnistrian officials, although tensions continue, and negotiations are ongoing. In February 1994, new legislative elections were held, and the ineffective Parliament that had been elected in 1990 to a 5-year term was replaced. A new constitution was adopted in July 1994. The conflict with the Gagauz minority was defused by the granting of local autonomy in 1994.
GOVERNMENT AND POLITICAL CONDITIONS
In 2000, Parliament passed a decree making Moldova a parliamentary republic, with the president elected by Parliament instead of by popular vote. Widespread popular dissatisfaction with previous governments and economic hardship led to a surprise at the polls in February 2001. In elections certified by international observers as free and fair, slightly over half of Moldova's voters cast their ballots for the Communist Party. Under the rules of Moldova's proportional representation system, the Communist faction, which in the previous Parliament consisted of 40 of Parliament's 101 seats, jumped to 71--a clear majority. The Parliament then elected the leader of the Communist faction, Vladimir Voronin, to be President.
President Voronin's first term was marked by up and down relations with the International Monetary Fund (IMF) and the World Bank. Politically, the government was committed to the reduction of poverty by allocating more resources to social safety net items such as health, education, and increasing pensions and salaries. Voronin proceeded with former President Lucinschi's plans to privatize several important state-owned industries and even on occasion broke with his own party over important issues. Under President Voronin, relations with the United States have remained strong. From January to April 2002, large demonstrations took place in opposition to several controversial government proposals, including expanded use of the Russian language in schools and its designation as an official language. While the demonstrations were sometimes tense, the government did not use force and ultimately agreed to Council of Europe (CoE) mediation.
In March 2005 parliamentary elections, the Communist Party received 46.1% of the vote, or 56 seats in the 101-member Parliament--more than enough for the 51-vote minimum required to form a government, but short of the 61 votes necessary to elect a president. However, President Voronin was re-elected with support from the Christian Democratic People's Party and from the Democratic and Social Liberal party factions, after Voronin promised to deliver on needed reforms and Euro-Atlantic integration for the country. These defections broke apart the opposition unity of the pre-election Moldovan Democratic Bloc, led by Our Moldova Alliance (AMN) faction leader and former Chisinau Mayor Serafim Urechean.
Nationwide local elections in June 2007 showed improvement over nationwide parliamentary elections in 2005, with better access to the media for opposition candidates, and greater evidence of impartiality by the Central Election Commission. While the voting itself generally met international standards, the government's behavior in the campaign period--including bias in state media and misuse of administrative resources--remained a concern. The Communist Party suffered a significant setback, losing the high-profile Chisinau mayoral election and control of numerous local councils to opposition party coalitions. Elections in the semi-autonomous region of Gagauzia were held in December 2006, while elections for the region's legislature were conducted in March 2008. Mikhail Formuzal, a longtime opponent of President Voronin, was elected "Bashkan" (Governor) in December 2006. Results of the legislative elections were inconclusive: as of May 2008, the 35 members of the People's Assembly had not been able to elect a speaker, and the loyalties of the 21 independent members were not yet clear.
Nationwide parliamentary elections are scheduled for March 2009, and the new Parliament will elect the next President of Moldova.
In addition to state-sponsored media, there are several independent newspapers, radio and television stations, and news services. The independent media organizations, along with some that are affiliated with political parties, often criticize government policies. In August 2004, Teleradio Moldova (TRM) was officially transformed from a state-owned company into a public broadcaster. However, journalists and civil society representatives, who claimed the process was nontransparent and meant to stack the new TRM staff with those favorable to the government, met this move with large protests. In February 2007, a controversial privatization process shut down the popular, pro-opposition Chisinau radio station Antena C, and installed new, pro-government management. The U.S. Ambassador, the Organization for Security and Cooperation in Europe (OSCE), and western diplomatic missions condemned the developments, which seemed to run counter to the Moldovan Broadcasting Code and risked silencing political opposition. Peaceful assembly is allowed, though permits for demonstrations must be obtained; private organizations, including political parties, are required to register with the government. Moldova enacted a new law on religion in July 2007. The new law, while noting the special status of the Moldovan Orthodox Church in Moldovan history and culture, in theory simplifies registration procedures and allows religious groups more access to public places. Although four religious groups have applied for registration under the new procedures, all four have been refused on what they claim are arbitrary grounds.
In February 2005, Brussels and Chisinau agreed on a European Union (EU)-Moldova Action Plan, a "roadmap" of reforms to strengthen the democratic and economic situation of the country and facilitate its Euro-Atlantic integration. Although Moldova has made some progress toward laying the structural and legislative foundation for reform, the EU has emphasized that more implementation is needed.
The population of the Moldovan region of Transnistria is approximately 40% Romanian/Moldovan, 28% Ukrainian, and 23% Russian. Separatist forces maintain control of the Transnistrian region, which lies along the Ukrainian border. Moldova has tried to meet the Russian minority's demands by offering the region rather broad cultural and political autonomy. The dispute has strained Moldova's relations with Russia. The July 1992 cease-fire agreement established a tripartite peacekeeping force comprised of Moldovan, Russian, and Transnistrian units.
Negotiations to resolve the conflict continue, and the cease-fire is still in effect. The Organization for Security and Cooperation in Europe (OSCE) is trying to facilitate a negotiated settlement and has had an observer mission in place for several years. In July 2002, OSCE, Russian, and Ukrainian mediators approved a document setting forth a blueprint for reuniting Moldova under a federal system. Over the next year and a half, the settlement talks alternated between periods of forward momentum and periods of no progress. In February 2003, the U.S. and EU imposed visa restrictions against the Transnistrian leadership. In April 2003, the Moldovan Government and the Transnistrian authorities agreed to establish a joint commission to draft a constitution for a reintegrated state. However, fundamental disagreements over the division of powers remained, and a settlement proved elusive.
President Voronin decided not to sign a Russian-brokered settlement with Transnistria in November 2003; the proposal--seen by many as pro-Transnistrian--sparked opposition protests. During the summer of 2004, the Transnistrian separatists forcibly closed several Romanian language Latin-script schools in the region, for which the regime was subject to international condemnation. In 2005, Tiraspol prevented several farmers on the right bank of the Nistru River from working their fields on the left bank, within Transnistria's "borders." The OSCE Mission to Moldova eventually mediated solutions to these crises.
After a 15-month pause, the sides met for a renewed round of settlement negotiations in October 2005. Mediators from Ukraine, Russia and the OSCE joined the Moldovan and Transnistrian representatives at the talks. In addition, the U.S. and EU joined the talks as observers. However, subsequent "5+2" negotiations have made little progress on a settlement or on withdrawal of Russian forces from Moldova: Russia still has weapons and munitions of the Operational Group of Russian Forces (formerly the Russian 14th Army) stationed in Transnistria, although it pledged to remove them under a timetable established at the 1999 OSCE Ministerial--the so-called "Istanbul Accords." However, there has been no progress on Russian withdrawals since early 2004.
In response to Moldova's call for international monitoring of the border, in December 2005 the EU dispatched a Border Assistance Mission (EUBAM) to help stem the flow of illegal trade between Ukraine and Moldova. In March 2006, Ukraine and Moldova began implementing a 2003 customs agreement, under which Transnistrian companies seeking to engage in cross-border trade must register in Chisinau. Despite the protests of Transnistrian leader Igor Smirnov, all major Transnistrian businesses have subsequently registered. In what is seen as a response to the new customs procedures, the Smirnov regime boycotted the 5+2 talks in March 2006. Although formal 5+2 talks remain stalled, President Vladimir Voronin and Transnistrian leader Igor Smirnov met in Bender on April 11, 2008, and agreed to initiate dialogue on confidence-building measures. Informal 5+2 discussions were held in Odessa, Ukraine, in April 2008 and focused on creating favorable conditions for resumption of formal talks. In September 2006, the Transnistrian regime held an "independence referendum." Despite the fact that the Smirnov regime claimed that the referendum demonstrated overwhelming support for independence, the vote was not monitored by any western organizations, and no country recognized the referendum or the independence of Transnistria.
Principal Government Officials
Prime Minister--Zinaida Greceanii
President of Parliament--Marian Lupu
Foreign Minister--Andrei Stratan
Ambassador to the United States--Nicolae Chirtoaca
Ambassador to the United Nations--vacant
Moldova's embassy in the United States is at 2101 S Street NW, Washington, DC 20008 (tel: 202-667-1130; fax 202-667-1204).
More information about Moldova can be found at the official Government of Moldova website at http://www.moldova.md/en/start/. The Moldova.org site is maintained by the Moldova Foundation, a non-governmental organization and has some useful links.
Moldova remains the poorest country in Europe. It is landlocked, bounded by Ukraine on the east and Romania to the west. It is the second smallest of the former Soviet republics and the most densely populated. Industry accounts for less than 15% of its labor force, while agriculture's share is more than 40%.
Moldova's proximity to the Black Sea gives it a mild and sunny climate. This makes the area ideal for agriculture and food processing, which accounts for one-third of the country's GDP. The fertile soil supports wheat, corn, barley, tobacco, sugar beets, and soybeans. Beef and dairy cattle are raised, and beekeeping is widespread. Moldova's best-known product comes from its extensive and well-developed vineyards concentrated in the central and southern regions. In addition to world-class wine, Moldova produces liqueurs and champagne. It is also known for its sunflower seeds, walnuts, apples, and other fruits.
Like many other former Soviet republics, Moldova has experienced economic difficulties. Since its economy was highly dependent on the rest of the former Soviet Union for energy and raw materials, the breakdown in trade following the breakup of the Soviet Union had a serious effect, exacerbated at times by drought and civil conflict. The Russian ruble devaluation of 1998 had a deleterious effect on Moldova's economy, but economic growth was steady from 2000 to 2005, averaging 7% after years of recession since independence. Economic growth slowed in 2006 (4.8%) and 2007 (3%), brought on by strained relations with Russia and a series of consecutive shocks--a two-fold increase in gas prices and a politically-motivated Russian ban on Moldovan wine imports in 2006 and a severe drought in 2007.
Moldova has made progress in economic reform since independence. The government has liberalized most prices and has phased out subsidies on most basic consumer goods. A program begun in March 1993 has privatized 80% of all housing units and nearly 2,000 small, medium, and large enterprises. Other successes include the privatization of nearly all of Moldova's agricultural land from state to private ownership, as a result of an American assistance program, "Pamint" ("land"), completed in 2000. A stock market opened in June 1995.
Following the economic difficulties caused by the Russian currency crisis of 1998, inflation dropped to 4.4% in 2002, the lowest level since Moldova's independence. However, inflation spiked again to 15.7% in 2003 and never fell below 10% over the following years, rising as high as 14.1% in 2006 and 13.1% in 2007, one of the highest in the region. While relatively stable in recent years, the local currency has been appreciating because of a weakening U.S. dollar and pressure from record remittances from Moldovans working abroad. Reforms to the National Bank of Moldova in 2006 changed the central bank's policy priority from currency stability to price stability (fighting inflation). The National Bank of Moldova has the difficult task of sterilizing the money supply to contain stubbornly high inflation.
Moldova continues to make progress toward developing a viable free-market economy. Tight fiscal policy resulted in a slight deficit of 0.3% of GDP in 2007. The Moldovan economy continues to depend greatly on remittances sent from Moldovans working abroad. These inflows have increased to over $1.2 billion a year.
Privatization results in recent years were not significant. With mass privatization over, the government has been mostly selling state-owned residual shares in companies and focusing on efficient management of state assets. Total proceeds in 2007 amounted to $16.7 million. State-owned residual shares in 33 companies and one land plot in Chisinau were privatized in 2007. The government postponed indefinitely privatizations in the power, banking, telecommunications, and agribusiness sectors. In 2007, Parliament passed a new law, introducing new approaches to privatizing and managing state-owned assets. As the European Union expanded to Moldova's border, 2007 saw record high inflows of foreign direct investment (FDI). However, cumulative FDI since independence is only $1.81 billion, far below the country's needs. Sporadic and ineffective enforcement of the law, corruption, economic and political uncertainty, and government interference discourage greater FDI inflows.
Spurred by soaring consumption and higher energy prices, imports have been growing more rapidly than exports. The country lacks diversification in terms of sector development and export markets. In 2007, the country's trade deficit was $2.3 billion (compared with $1.6 billion in 2006).
In 2005, Russia enacted a ban on Moldovan agricultural products and in 2006, it banned imports of Moldovan wines. Although Russian President Putin announced an end to the wine ban in November 2006, actual resumption of wine exports came a year later. The November 2007 resumption of wine exports to Russia was a positive development, but full recovery of trade volumes will take time. The wine ban was particularly painful because, prior to the ban, Moldovan wines accounted for one-third of the country's exports and 80% of wine exports went to Russia. The Russian wine ban further widened the country's trade deficit. Moldova's exports to Russia declined by 47.6% in 2006 and total exports dropped 3.6%, resulting in a trade deficit of 47% of GDP. Some Moldovan wineries were successful in finding new, alternative markets for their products in 2007. The current Central European Free Trade Agreement (CEFTA) and EU autonomous trade preferences are incentives for further market diversification.
In January 2006, Russian energy giant Gazprom temporarily cut off natural gas deliveries to Ukraine and Moldova--which is almost completely dependent on its neighbors for energy--and subsequently doubled the price of gas to Moldova. The prices of Russian gas increased to U.S. $170 per one thousand cubic meters in 2007, U.S. $192 in the first quarter of 2008, and U.S. $212 in the second quarter of 2008. The prices will increase until 2011, reaching parity with the average EU price.
The International Monetary Fund (IMF) and World Bank resumed lending to Moldova in July 2002, and then suspended lending again in July 2003. In early 2006, Moldova reached agreement with the Paris Club on rescheduling Moldova's foreign debt. In addition, in the spring of 2006, the IMF reached an agreement with the Moldovan Government for a Poverty Reduction and Growth Facility designed to bolster foreign reserves against external shocks with a 3-year, $180 million program that includes a new IMF loan to the National Bank of Moldova.
Moldova suffered from a severe drought during much of 2007 which caused hundreds of millions of dollars in agriculture sector losses and prompted concerns about food availability. In response to a request for assistance from the Government of Moldova, the United States provided $350,000 worth of seed to drought ravaged farmers in time for fall planting.
DEFENSE AND MILITARY ISSUES
Moldova has accepted all relevant arms control obligations of the former Soviet Union. On October 30, 1992, Moldova ratified the Conventional Armed Forces in Europe Treaty, which establishes comprehensive limits on key categories of conventional military equipment and provides for the destruction of weapons in excess of those limits. It acceded to the provisions of the nuclear Non-Proliferation Treaty in October 1994 and to the Biological Weapons Convention in December 2004. It does not have nuclear, biological, or chemical weapons. Moldova joined the North Atlantic Treaty Organization's Partnership for Peace on March 16, 1994. Due to Moldova's constitutional neutrality, it is not a participant in the Commonwealth of Independent States (CIS--a group of 12 former Soviet republics) Collective Security Agreement.
In 1995, the country became the first former Soviet republic admitted to the Council of Europe. In addition to its membership in NATO's Partnership for Peace, Moldova also belongs to the United Nations, the OSCE, the North Atlantic Cooperation Council, the International Monetary Fund, the World Bank, and the European Bank for Reconstruction and Development. Moldova is a member of the World Trade Organization (WTO).
In 1998, Moldova contributed to the founding of GUAM, a regional cooperative agreement made up of Georgia, Ukraine, and Azerbaijan, in addition to Moldova. Although the agreement initially included a declaration of mutual defense, Moldova has since declared its disinterest in participating in any GUAM-based mutual defense initiative. Moldova has been involved in information exchange, trade and transportation, border control, and energy projects issues within this regional agreement. In 2006, the organization's members voted to change the name to the Organization for Democracy and Economic Development--GUAM.
The past three years have seen significant developments in Moldova's relations with the West. In 2005, the European Union appointed a Special Representative for Moldova and the negotiations to resolve the Transnistrian conflict and the Delegation of the European Commission opened an office in Chisinau, In December 2005, Moldova welcomed an EU Border Assistance Mission (EUBAM) along its Ukrainian border to crack down on smuggling, strengthen customs procedures and facilitate cross-border cooperation. In accordance with a 2005 Action Plan with the EU, Moldova has begun to harmonize Moldova's laws with those of the EU. As part of this, in late 2005, Moldova enacted its "Guillotine" laws, which slashed unnecessary business regulations, established a framework for relations between the private sector and government and created a mechanism to review the suitability of draft legislation.
In the atmosphere of heightened international sensitivity to terrorism following the events of September 11, 2001, Moldova has been a supporter of American efforts to increase international cooperation in combating terrorism. Moldova has sent demining units and peacekeepers to participate in post-conflict humanitarian assistance in Iraq.
The dissolution of the Soviet Union in December 1991 brought an end to the Cold War and created the opportunity to build bilateral relations with the 15 new states that had made up the former U.S.S.R. as they began political and economic transformation. The United States recognized the independence of Moldova on December 25, 1991 and opened an Embassy in its capital, Chisinau, in March 1992. The U.S. Ambassador to Moldova, Michael Kirby, arrived at post on September 1, 2006.
A trade agreement providing reciprocal most-favored-nation tariff treatment became effective in July 1992. An Overseas Private Investment Corporation agreement, which encourages U.S. private investment by providing direct loans and loan guarantees, was signed in June 1992. A bilateral investment treaty was signed in April 1993. Generalized system of preferences status was granted in August 1995, and some Eximbank coverage became available in November 1995.
In 2006, the U.S. Millennium Challenge Corporation approved Moldova's $24.7 million Threshold Country Plan to combat corruption. The MCC also ruled that Moldova is eligible to apply for full compact assistance, and the Moldovan Government submitted its compact proposal in 2008.
[Fact sheet on FY 2007 U.S. Assistance to Moldova.]
Principal U.S. Embassy Officials
Ambassador--Michael D. Kirby
Deputy Chief of Mission--Kelly Keiderling
Consular Officer--David Franz
Management Officer--Stanislas Parmentier
Political/Economic Officers--Daria Fane, Ernest Abisellan, Michael Mates
Public Affairs Officer--John Balian
Regional Security Officer--Nick Pietrowicz
USAID Officer--Gary Linden
The U.S. Embassy in Moldova is at Strada Alexei Mateevici #103, Chisinau (tel: 373-22-40-83-00/23-37-72; fax: 373-22-23-30-44).