Weekly Roundup

News of the week February 15 - 19

Welcome to Moldova Matters! A weekly roundup of Moldovan news with a focus on politics and economics. For a brief overview of what this newsletter is about, or why you should care about anything the author has to say, see my previous introduction post. In this first weekly roundup, we will talk about developments in Politics and Government, COVID in Moldova and Business and Economics. Topics and titles will vary week to week depending on the news and as I work out the best format. Please feel free to send me emails with corrections or recommendations!!

Politics and Government: 

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Since this is the first of my “This Week in Moldova” newsletters there will be a little extra context in the politics section to bring people just jumping in up to date. Future versions will strive to be shorter. 

The political dark comedy in parliament continues with various twists and turns between President Maia Sandu’s PAS Party and a loose coalition of parties led by former President Igor Dodon’s Socialists (PSRM) over whether to have early elections or to put in place a caretaker government. 

Recall, during the 2020 presidential elections both Igor Dodon and Maia Sandu as well most other parliamentary factions stated the need for early elections as soon as possible. Following Maia Sandu’s landslide victory in November all parties have continued to state a desire for parliamentary elections but only the PAS party is taking concrete action in that direction. President Sandu nominated Natalia Gavrilita (former Minister of Finance in the Maia Sandu government) to form a government. If the proposed Prime Minister fails to gain majority support in Parliament in two votes, elections will be called.  

Confused yet? It gets stranger. President Sandu and the PAS party have expressed confidence in the Gavrilita Government as the best choice for Moldova BUT also encourage all parties not to vote for them in order to trigger elections. In order to further assure this, Gavrilita proposed a sweeping government program focused on tackling corruption and on COVID health and economic response. Both issues PAS believes are anathema to the Socialists and other parliamentary groups. 

Why early elections? The current parliament was elected in February 2019 and was initially dominated by the issue of state capture by Vladimir Plahotnuic. Once Plahotnuic fled in June 2019 parliament has been in a state of confused realignment as Plahotnuic’s former party the Democrats (PD) has fractured and many MPs have changed allegiance from the parties that voters went to the polls for. While all parties stress that this parliament is no longer representative of the people, polls show that an election will result in only 3 political groups with strong chances - PAS, PSRM and “Our Party.” This means that PD, Pro-Moldova, Platform DA and the Shor Party stand to lose seats or be eliminated entirely which outlines clearly why some parties have strong desire for elections while others want to stall. 

Last week Gavrilita presented her program and government to parliament and failed to garner a single vote. But to prevent elections the Igor Dodon announced a surprise semi-coalition between PSRM, Pro-Moldova, Shor… kinda. There are considerable attempts for all parties to distance themselves from Shor’s party but clearly they are willing to work together at least situationally (Recall Ilan Shor fled to Israel after being accused of orchestrating the theft of 1 billion dollars from 3 Moldovan banks). Together, this new coalition has nominated Ex-Minister of Finance Mariana Durlesteanu to create a new government. President Sandu refused and re-nominated Gavrilita hoping to get a second vote and when it fails, trigger elections. All parties have now called foul and presented cases to the Constitutional Court. 

This week the Constitutional Court affirmed Maia Sandu’s right to appoint whichever minister she wants but punted on the issue of whether she has to recognize the candidate of the unofficial majority which was brought in a separate appeal. They will rule on that on February 23rd leading Igor Dodon to declare victory even though the decision nominally supported President Sandu’s position. 

Is this a Constitutional Crisis? Kinda, but it’s long been a slow burning one. At the heart of the issue is whether Moldova is a Parliamentary system or what, if any, role the President has in Government. Recall that the President of Moldova was previously elected by Parliament and served a largely ceremonial role until the Constitutional Court decided in 2016 (believed to be under the influence of Plahotnuic at the time) to unilaterally alter the constitution towards direct presidential elections. This resulted in many mini-crisis in which President Dodon claimed a mandate to make his own decisions and the Parliament (controlled by Plahotnuic) disagreed and appealed to the constitutional court to temporarily suspend him from the presidency so that the next in the line of succession could promulgate laws, etc. This 5 minute break from being president was jokingly called the Dod-on Dod-off move. 

Looking Ahead: It seems clear that this crisis will continue a slow burn as all sides maneuver towards or away from early elections. As things stand, the earliest an election could occur would be in June putting the prospect of a government with any kind of mandate tackling the many serious crisis ongoing in Moldova quite far down the road,

COVID News

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After some positive trends in December and January cases and hospitalizations are headed back up in Moldova with a 7 day average of over 800 cases per day. This trend is worrying and has caused the interim government to renew many restrictions due to expire February 15th and to impose new ones. 

Current Restrictions Recap: Currently, Moldova continues in a light-lockdown regime. Bars and restaurants are open until 10 pm and most other stores and businesses are open with the exception of nightclubs and music venues (though this is often ignored). Travel across the border is restricted with a “red list” of countries requiring a quarantine on arrival and local public transit has limits on the number of people who can be in busses. Masks are required inside and outside though this can be hit or miss in practice. Theoretically, certain outdoor markets are now restricted to operating three days a week. But the central market is refusing to comply and no clear answer about the rules is forthcoming. Full list of restrictions is located at this link. 

What about vaccines?

Moldova is set to receive around 20,000 doses of the Pizer vaccine and around 200,000 doses of the Astrazeneca vaccine this month. Doses are provided in part by Romania and largely from the WHO COVAX program. Moldova’s health ministry is working hard to prepare for these vaccines with test-runs of deliveries as well as creation of cold storage units for the MRNA vaccine. Vaccination will be carried out with an initial focus on healthcare workers and first responders and then proceeding through different risk groups before the general public. Alarmingly, some polls have shown as many as 17 out of 20 doctors and healthcare workers refusing to be vaccinated citing lack of trust in the vaccine. Frustratingly, former president Igor Dodon is adding to vaccine skepticism claiming he does not trust “Western Vaccines” and promoting the Russian Sputnik V vaccine. No definite date for the vaccine’s arrival is set but the government as well as the WHO say that they should arrive before the end of february. 

Business and Economics

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As the political crisis continues to roil, the economic crisis caused by the pandemic continues. The Moldovan government(s) implemented few policies meant to address the pandemic in 2020 and the hopes for this changing in 2021 continue to be pretty bleak. Much news this week has centered around just how bad things might be, with the candidate for Prime Minister proposed by Igor Dodon, Mariana Durlesteanu, suggesting that the economy and even the State could collapse in June. Mrs Durlesteanu hastily deleted her post suggesting a GDP shrinkage of 14% or more in 2021 and the IMF and World Bank are both projecting GDP growth in 2021 (4.1 and 3.5% respectively). While this has turned into a political scandal of sorts it has spurred precious little real discussion about how to approach the economic system in the coming year. 

Meanwhile… small companies continue to disappear and other businesses are hurting. Residents of Chisinau will note numerous restaurants that have vanished during the pandemic and the crisis continues to be acute in any industry directly affected by business restrictions (disclosure: the author is the owner of a restaurant). The Moldova Small Enterprise Alliance conducted a survey in August 2020 suggesting that as many as 50% of small and medium sized companies across industries were worried about bankruptcy in the first months of 2021 (disclosure the author is Board President). Followup surveys conducted by other groups continue to show a struggling economic and employment situation but have not had much effect on government policy towards the crisis. 

What happens next?

While the proposed Gavrilita government failed to get a single vote, it did propose a comprehensive program of economic mitigations and stimulus to handle the crisis. Mrs. Gavrilita is unlikely to be voted into power in whatever emerges from the current political crisis, but this document could be viewed as an early indication of how PAS intends to approach economic issues in the next election. We will take an in-depth look at these proposals in a future article and what they might mean for both COVID response as well as the future of the Moldovan economy. If the government of Mariana Durlesteanu proposes a program we will also take a look through this document and comment on any political party platform’s economic plans as they come out.

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