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Moldova (10/04)


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For the most current version of this Note, see Background Notes A-Z.

Flag of Moldova is three equal vertical bands of blue (hoist side), yellow, and red; emblem in center of flag is of a Roman eagle of gold outlined in black with a red beak and talons carrying a yellow cross in its beak and a green olive branch in its right talons and a yellow scepter in its left talons; on its breast is a shield divided horizontally red over blue with a stylized ox head, star, rose, and crescent all in black-outlined yellow. 2004. 

PROFILE

OFFICIAL NAME:
Republic of Moldova

Geography
Area: 33,843 sq. km. (13,000 sq. mi.); slightly larger than Maryland.
Cities: Capital--Chisinau.
Terrain: Rolling steppe, gradual slope south to Black Sea.
Climate: Moderate winters, warm summers.
Time Zone: GMT+2

People
Nationality: Noun--Moldovan(s). Adjective--Moldovan.
Population (1989 census): 4.28 million.
Population growth rate: -0.3% (est.).
Ethnic groups (1989 est.): Moldovan/Romanian (65%), Ukrainian (13.8%), Russian (13%), Gagauz (3.5%), Jewish (1.5%), Bulgarian (2%), other (1.7%).
Main religions: Eastern Orthodox (98%), Jewish, Baptist.
Languages: Romanian (official), Russian, Gagauz.
Education: Literacy--96%.
Health: Infant mortality rate--44/1,000. Life expectancy--67 years.
Work force (2 million): Agriculture--35%; industry--20%; other--45%.

Government
Type: Republic.
Constitution: Adopted July 28, 1994.
Independence: August 27, 1991 (from Soviet Union).
Branches: Executive--President (head of state), Prime Minister (head of Government), Council of Ministers (cabinet). Legislative--unicameral Parliament. Judicial--Supreme Court.
Administrative subdivisions: 32 counties (raions), 4 municipalities, and one autonomous territorial unit.
Political parties: Communist Party, Popular Christian Democratic Party, Our Moldova Alliance, Democratic Party, and Social Liberal Party.
Suffrage: Universal at 18.

Economy
GDP (2003 est.): $1.7 billion ($ 1.6 billion in 2002; $1.5 billion in 2001; $1.3 billion in 2000).
GDP real growth rate (January-September 2003): 7.0% (7.2% in 2002; 6.1% in 2001).
Per capita GDP (2003 est.): $460 ($448 in 2002; $422 in 2001).
Natural resources: Lignite, phosphorites, gypsum, arable land, limestone.
Agriculture: Products--vegetables, fruits, wine and spirits, grain, sugarbeets, sunflower seeds, meat, milk, tobacco.
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 (2002): Exports--$644 million (of which 46% go to countries outside the former Soviet Union): foodstuffs, wine, tobacco, textiles and footwear, machinery, chemicals. Major markets--Russia, Ukraine, Italy, Romania, Germany. Imports-- $1,039 million (of which 61% come from countries outside the former Soviet Union): gas, oil, coal, steel, machinery and equipment, chemical products, textiles, foodstuffs, automobiles, and other consumer durables. Major suppliers--Ukraine, Russia, Romania, Germany, Italy.
Currency: Moldovan Leu (plural Lei).
Exchange rate: Lei/US$ (2003): 13.22 (end of year), 13.94 (average); (13.57 average in 2002) 

PEOPLE AND HISTORY
The great majority of Moldova's population is Eastern Orthodox. There are a small number of Jewish and Baptist adherents among the population. Ethnic groups include Moldovan/Romanian, Ukrainian, Russian, Gagauz, and Bulgarian. Romanian is the official language; Russian and Gagauz also are spoken.

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 Moldova (west of the Prut) remained with the Turks. Romania, which gained independence in 1878, took control of the Russian half of Moldova 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 eastern Moldova 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. Romania sought to regain it by joining with Germany in the 1941 attack on the U.S.S.R. Moldova was ceded back to Moscow when hostilities between the U.S.S.R. and Romania ceased at the end of World War II. The present boundary between Moldova and Romania was established in 1947. Moldova remained part of the U.S.S.R. until the early 1990s; the Soviet Union was formally dissolved In December 1991.

In October 1990, Mircea Snegur was elected president of Moldova by the Parliament. A former Communist Party official, he endorsed independence from the Soviet Union and actively sought Western recognition. Moldova declared its independence from the U.S.S.R. in August 1991. However, Snegur's opposition to immediate reunification with Romania led to a split with the Moldovan Popular Front in October 1991 and to his decision to run as an independent candidate in a December 1991 presidential election. Running unopposed, he won after the Popular Front's efforts to organize a voter boycott failed.

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--assisted by uniformed Russian military forces in the region and led by supporters of the 1991 coup attempt in Moscow--declared a "Dniester republic."

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.

The February 1994 Parliamentary elections were conducted peacefully and received good ratings from international observers for their fairness. Prime Minister Andrei Sangheli was re-elected to his post in March 1994, as was Petru Lucinschi to his post as speaker of the Parliament. Authorities in Transnistria, however, refused to allow balloting there and discouraged the local population from participating. Inhabitants of the Gagauz separatist region did participate in the elections.

In the presidential elections of 1996, Parliamentary speaker Petru Lucinschi surprised the nation with an upset victory over the incumbent, Mircea Snegur, in a second round of balloting. The elections were widely judged as free and fair by international observers, a hallmark that would come to characterize future nationwide elections in Moldova as well.

Though President Lucinschi managed to institute some very important reforms--among them the successful fight for the "Pamint" land privatization program--his tenure was marked by constant legislative struggle with Moldova's Parliament. Several times, the Parliament considered votes of no confidence in the President's government, and a succession of moderate, pro-reform prime ministers were dismissed by a Parliament increasingly dominated by the Communist Party faction.

GOVERNMENT AND POLITICAL CONDITIONS
In 2000, Parliament passed a decree declaring Moldova a parliamentary republic, with the presidency henceforth to be decided not by popular vote, but by parliamentary vote. However, since no single candidate was able to garner a majority of votes, Lucinschi temporarily remained president. Later that year, when Parliament failed three times to successfully elect a new president, Lucinschi exercised his right to dissolve Parliament, calling for new parliamentary elections in the hope that a new Parliament would be more open to his initiatives--and, possibly, even rescind the decree on election of the president.

Widespread popular dissatisfaction with the government and the economy, however, 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 communists. 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. Communist deputies were then able to elect as president Vladimir Voronin, the leader of their faction.

Voronin's tenure has been marked by up and down relations with the International Monetary Fund (IMF) and the World Bank. The assistance of these international financial institutions is critical because large government debts must be rescheduled. Politically, the government is committed to the reduction of poverty by allocating more resources to social safety net items such as health, education, and increasing pensions and salaries. Since election, President Voronin has proceeded with President Lucinschi's plans to privatize several important state-owned industries, and has even on occasion broken with his own party over important issues. Under President Voronin, relations with the United States remain 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.

Local elections in May and June 2003--the first nationwide contests since the Communists came to power--did not meet the relatively high electoral standards set in previous Moldovan elections, according to international observers. While the voting itself generally met international standards, the government's behavior in the campaign period--including bias in state media, misuse of administrative resources, and the arrests of two opposition mayors--represented a step backward. The Communists won the largest share of votes, but lost in the country's highest-profile race, for mayor of Chisinau. Parliamentary elections are scheduled for early 2005.

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. Peaceful assembly is allowed, though permits for demonstrations must be obtained; private organizations, including political parties, are required to register with the government. Legislation passed in 1992 codified freedom of religion but required that religious groups be recognized by the government.

A 1990 Soviet law and a 1991 Parliamentary decision authorizing formation of social organizations provide for independent trade unions. The General Federation of Trade Unions succeeded the Soviet trade union system upon Moldovan independence. In late 2000, the union split. The Trade Union Confederation of Moldova (TUCM), successor to the previous federation, retained 80% of the union members in Moldova, and primarily represents agriculture and agricultural processing sector, public services, radio electronics, medicine, education, and culture. "Solidaritate" (solidarity), a new organization, includes the remaining 20% of unionized workers from industry, transport, telecommunication, construction, and social protection. The unions have tried to influence government policy in labor issues and been critical of many economic policies. Moldovan labor law, which is based on former Soviet legislation, provides for collective bargaining rights.

Transnistria
The population of the Moldovan region of Transnistria is 40% Romanian/Moldovan, 28% Ukrainian, and 23% Russian. Separatist forces maintain control of the Transnistrian region, 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) also is trying to facilitate a negotiated settlement and has had an observer mission in place for several years. In July 2002, the 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, but fundamental disagreements over the division of powers remained, and a settlement proved elusive. In May 2003, Ukraine and Moldova reached an agreement under which Ukraine would no longer recognize Moldova's obsolete customs stamps, which were still being used by the Transnistrians.

In a surprise move, President Voronin decided not to sign a Russian-brokered settlement with Transnistria in November 2003. The appearance of the Russian proposal--seen by many as pro-Transnistrian--was enough to set off a brief wave of opposition protests, reminiscent of 2002 protests against the government's proposals to change language and history education in schools. The potential for continued protest over these contentious issues remains. Russia has not removed the weapons and munitions of the Organized Group of Russian Forces stationed in Transnistria, thus failing to comply with the timetable set forth in the 1999 Istanbul Accords. In 2003 Russia failed to meet its second one-year extension from the original withdrawal date of December 31, 2001.

Principal Government Officials
President--Vladimir Voronin
Prime Minister--Vasile Tarlev
President of Parliament--Eugenia Ostapciuc
Foreign Minister--Andrei Stratan
Ambassador to the United States--Mihai Manoli
Ambassador to the United Nations--Vsevolod Grigore

Moldova's embassy in the United States is at 2101 S Street NW, Washington, DC 20008 (tel: 202-667-1130; fax 202-667-1204).

For more information on Moldova, see the Moldova.org group's web site. 

ECONOMY 
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. Moldova's economy resembles those of the Central Asian republics, rather than those of the other states on the western edge of the former Soviet Union. Industry accounts for only 20% of its labor force, while agriculture's share is more than one-third.

Moldova's proximity to the Black Sea gives it a mild and sunny climate. This makes the area ideal for agriculture, which accounts for about 40% of the country's GDP. The fertile soil supports wheat, corn, barley, tobacco, sugarbeets, 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, plums, peaches, 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. After the Russian ruble devaluation of 1998, Moldova's economy underwent a prolonged recession, from which it started to emerge in 2000.

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 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.

Inflation was brought down from over 105% in 1994 to 11% in 1997. Though inflation spiked again after Russia's 1998 currency devaluation, Moldova made great strides in bringing it under control: 18.4% in 2000, 6.3% in 2001, and 4.4% in 2002. However, in 2003 inflation escalated again--due mainly to a drought-driven rise in agricultural prices--reaching 15.7%. Also in 2003, the Moldovan Leu appreciated some 4% against the U.S. dollar.

Moldova continues to make progress toward developing a viable free-market economy. The country recorded its fourth consecutive year of positive GDP growth in 2003, with year-end real GDP growth of 6%. This growth is impressive considering that, prior to 2000, Moldova had recorded only one year of positive GDP growth since independence. Equally impressive was budget execution in 2003, with a budget surplus of about Moldovan Leu 300 million, or $21.5 million.

Privatization results in 2003 were not significant: several smaller companies and two wineries were privatized in 2003, but the government was not able to privatize several larger state enterprises, notably Moldtelecom and two electricity distribution companies. Sporadic and ineffective enforcement of the law, combined with economic and political uncertainty, continues to discourage inflows of foreign direct investment.

Imports increased more rapidly than exports during the first nine months of 2003; Moldova's terms of trade worsened, as higher-priced energy imports outpaced the value of Moldova's main exports--agricultural and agro-processing goods.

During 2002, Moldova rescheduled an outstanding Eurobond, in the amount of $39.6 million, to avoid a potential default. Debt servicing represented 32.5% of the budget in 2003. Moldova informed its bilateral creditors in mid-2003 that it would no longer service its debts. The 2004 budget does provide funds for bilateral debt service. Despite difficult negotiations, the International Monetary Fund (IMF) and World Bank resumed lending to Moldova in July 2002, then suspended lending again in July 2003.

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 in Washington, DC. It does not have nuclear, biological, or chemical weapons. Moldova joined the North Atlantic Treaty Organization's Partnership for Peace on March 16, 1994. Moldova joined the Commonwealth of Independent States (CIS--a group of 12 former Soviet republics) in 1991. Due to Moldova's constitutional neutrality, it is not a participant in the CIS Collective Security Agreement.

FOREIGN RELATIONS 
Moldova's Parliament approved the country's membership in the Commonwealth of Independent States and a CIS charter on economic union in April 1994.

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. In 1999, Uzbekistan also joined the group, renamed GUUAM. Although the agreement initially included a declaration of mutual defense, Moldova has since declared its disinterest in participating in any GUUAM-based mutual defense initiative.

As noted, Moldova has sought a peaceful resolution to the conflict in the Transnistria region, in recent years by working with Transnistria, Ukraine, Russia, and the OSCE to draft a plan for reunification of the country on a federal basis. 

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 sent a contingent of deminers and peacekeepers to participate in post-conflict humanitarian assistance in Iraq.

U.S.-MOLDOVAN RELATIONS 
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 current U.S. Ambassador to Moldova, Heather M. Hodges, arrived at post in October 2003.

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.  

[Fact sheet on FY 2004 U.S. Assistance to Moldova.]

Principal U.S. Embassy Officials
Ambassador--Heather M. Hodges
Deputy Chief of Mission--John Winant
Consular Officer--Andrew Paul
Management Officer--Charles Eaton
Political/Economic Officers--Henry McDowell, Larry Wright
Public Affairs Officer--Aleisha Woodward
Regional Security Officer--Greg Sherman
USAID Officer--John Starnes

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).

For the most current version of this Note, see Background Notes A-Z.



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