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Home , Igor Corman, Liberal Party (Moldova), Tiraspol

additional fact-checking and peer review, is released to contribute to the policy debate in The “Reality Check” is a policy review process and outside of . aiming to gather insights from top domestic and international analysts, practitioners, diplomats and policy-makers working in and Domestic Affairs: Reforms lost in geopolitics on the Eastern Partnership (EaP) countries, Among the EaP countries, Moldova is a with the ambition to provide a realistic policy frontrunner in understanding that European framework based on evidence on the Union (EU) integration is primarily about ground. The first such a review was the domestic reforms rather than about foreign Belarus Reality Check enacted in , policy. But being distracted by geopolitics – Lithuania in October 2012. now with a lot of help from – the main Following the first Moldova Reality Check homework, the transformation of the session held in during the GLOBSEC governance model, is lagging behind. 2013 conference on 20 April 2013, the second If you had to choose between event took place on 5 November, 2013 in adherence to the Eurasian Customs Union or the , which Vilnius, Lithuania at the premises of the option would you vote for? Ministry of Foreign Affairs of Lithuania. The Do Not meeting was organised after the first hundred Know - 10.4 days of Leanca’s government and only a few None - 4.9 weeks before the EaP Summit in Vilnius.

The review group comprises top Western, EU - 44.3 Moldovan and regional analysts with a particular emphasis on the independent ECU - 40.4 character of the group in order to deliver evidence-based and balanced policy advice for the post Vilnius Summit period. Reality Check meetings are held under the Chatham House Rule and the list of Source: What Do Think? Public Opinion Poll, Slovak Atlantic Commission and Central participants is not distributed. This non-paper, European Policy Institute, SlovakAid, November 2013 summarizing the debate held in Vilnius with 1

Moldova’s ruling elite accepted the EU’s offer concessions (such as the case of the Chisinau for modernisation and signed up for a wide- Airport deal) would send a strong political ranging reform process. This process would message. The whole political spectrum should run counter to its short-term political priorities, be covered in order to reduce the zero-sum though. In addition to that, serious challenges framework, however, intensified monitoring as – polarised political climate, political well as tactful assistance to pro-European instability, weak political institutions and lack parties (although distinction between them of trust vis-à-vis state institutions – have a should be made, finally) should be provided strong impact on implementation of any by the European Parliament along with other reforms. European partisan institutions. Ending the “Moldova as a success story” Throughout this process the EU may strongly rhetoric, which has caused cynicism among consider putting re-integration with many Moldovans, would be the first back on the table – first through a important post-Vilnius Summit step in order to cost benefit analysis, while the establishment re-gain a power broker position. Geopolitical of a re-integration and investment fund tattering before Vilnius caused the Moldovan should follow in order to make re-integration ruling elite to continue its previous rent- a realistic possibility and provide an seeking practices, further alienating the alternative to Russia’s ongoing subsidies in Communist opposition, widening the “either Transnistria. Without changing the incentives or” political framework, with Russia growing for well-cemented interest groups around more resilient and the EU favouring the ruling Transnistria (including in Russia, , and coalition. Realistic expectations should be Moldova) the association process is unlikely framed: transformation – as well as the to be turn into an integration one – unless the association process itself – will take time. EU risks another Cyprus. Recommendations: While the EU should Economy and Energy: Key issues not in public increase reform assistance, it should move discourse away from being viewed as a partisan Who is actually aware in Moldova that the player. Its desirable role combines close Deep and Comprehensive Free Trade monitoring of the political situation as a Agreement (DCFTA) does not imply joining neutral public actor, supporting technical the EU, while the Customs Union (CSU) is an implementation (reforms) implying actual political decision (CSU being like the conditionality, and supporting civil society EU’s single market)? That a certain focusing on accountability and civic compatibility model is possible, with Serbia for education issues. Tangible deliverables of the example having both Association Agreement reform process, such as visa liberalization, (AA) with DCFTA as well as a free trade should be made visible in a much bolder agreement (FTA) with Russia? That Moldova manner. Other benefits, such as better roads, does not have a common border with the need to be better communicated to the CSU, which makes participation impossible by public too. current rules (similarly to Armenia)? Or for that Concentrating on judiciary and law matter that Moldova negotiated a ten-year enforcement would be necessary for the EU, transition period for the agriculture sector while using the regulatory framework to under DCFTA? On top of that, that energy eliminate dubious privatization deals and

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prices are out of scope of the CSU deal and size and funds, but about the visible progress will depend on the Kremlin`s political will? and benefits it brings. The bulk of the EU’s assistance targets state actors and public Indeed, the DCFTA dynamics is set up for administration involved in the AA and DCFTA longer-term and it is a trade framework negotiations and implementation, but a intended to change the country’s operation significant amount of obligations stemming as such. Short-term costs could be mitigated, from the DCFTA is to be borne by the private though. Still, Moldova’s economy cannot sector – what is the EU doing for the private afford an immediate and exclusive pro- sector? The EU should target the private Western vector as both markets are sector in a close interaction and coordination important, CSU (and CIS more generally) is with the European Bank for Reconstruction critical for agriculture where one third of the and Development (EBRD). When raising country’s workforce is employed, while the EU awareness a clear distinction between the is crucial as a source of technology, AA and DCFTA should be made too – the two innovations and imports, as well as being quite confusing to the general public – competitiveness and investments. Such points as this is not only about trade, but rather a are absent in the political discourse, thus process including visa liberalisation and other leaving only “either-or” zero-sum game and benefits. geopolitical thinking. External (F)actors: EU’s inroads - Resurgent Energy independence will be achieved only Russia in the longer-term, but there are two key projects in gas and electricity sectors (Iasi- It needs to be acknowledged that domestic and Vulcanesti-Isaccea politics of the EU and Russia interact with their respectively) supported by the EU already foreign policies. Too often both of them are underway, while Moldova can and should presented as monolithic blocks, but there are devise a clear domestic strategy to reduce its important nuances within the Russian political own consumption and invest into alternative elite when it comes to Moldova and energy sources. Russia’s offer is quite Transnistria. Also in the case of the EU, the different: Russia offers no long-term internal developments and foreign policies development model, but short-term are even more tightly interwoven because of incentives such as lower energy prices, and is the EU’s multilevel system of governance. willing and able to use punitive measures and The EU is making inroads in Moldova when it pressure immediately, e.g. by using comes to assistance, Moldova now being the Transnistria and , and selectively biggest aid recipient per capita in the funding opposition parties, with the goal of neighbourhood. The political will and backing undermining the EU’s attractiveness in the have been there despite the lack of reforms, short-term. and Ukraine suspending the signature of the Recommendations: To lower the cost of its AA will further increase that political support. policies in short-term, the EU should focus In case of a continuing zero-sum game with both on delivery (assistance) and on raising Russia, the EU could be ready to accept the awareness in the society. Information on AA aspiration of Moldova to get membership – and DCFTA is now confined only to a very something that should naturally come after narrow group of actors and experts. the next parliamentary elections in 2014. Communicating assistance is not about the Moldova needs a much better track record

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to persuade all EU member states, which can intentions should not lead towards a blind- be achieved especially with the necessary eyed policy. reforms as well as handling the next elections. Moldova can even act as if it signed the AA, but a realistic timeframe should be drawn: the Vilnius Summit is the initiation, while in 2015 is likely to see the AA signed and Choice between the European and Eurasian ratified (after). The visa-free regime should be model has become the subject of major in place within a year. focus in Moldova before the Vilnius Summit, The EU, and especially certain member thus reducing focus on and capacity for states, will push for more support for Moldova actual reforms. The European model after Ukraine’s decision to suspend signing constitutes a historical choice that Moldovans the AA before the Vilnius Summit. But a lesson could make freely, and the ruling elite clearly should be learned from Ukraine and the recognises the associated benefits. But for Russian actions. Given the 2014 parliamentary parts of the Moldovan society concentrating election is close and the Ukrainian suspension on survival, being dependant on Russian is so painful, a greater push for Moldova will markets, the Eurasian model is an alternative. likely trigger an even greater resurrection of The ruling government’s practice of corrupt Russia as well. This framework is not likely to politics and the “either or” rhetoric are only help push the necessary reforms, rather it will fuelling those feelings. If the main success of be more likely to increase geopolitics. the current government remains its declared Recommendations: Moldova certainly orientation towards , the opposition deserves all the support the EU can muster for will have greater incentives to oppose Europe the post-Vilnius period – including re- given the higher frequency zero-sum considering enacting article 49 for the AA (geopolitical) framework. preamble. But in parallel the EU could (and, Domestic reforms: there has been slow more importantly, should) further increase progress on domestic reforms, while public political conditionality as it tried with Ukraine awareness about the benefits of those is even before Vilnius. Given it holds much more more meagre. The list of reforms is modest: cards than in Ukraine, the outside-of-the-box the law on financing of political parties as thinking may be helpful considering Russia. one of the most important laws is still pending knows that Vilnius is the beginning of in the parliament given the lack of political the process and not the end. What the EU will from the main coalition parties (Liberal cannot do before the Summit may be and Democratic Party) to considered after: a substantial dialogue adopt it. There has been an ongoing battle between the European Commission and the of models, while the credibility of the EU has Eurasian Economic Commission. Or, at least been shrinking along with the support for the an expert dialogue could start – under the government coalition. Weak political auspices of the upcoming Latvian Presidency institutions and the judiciary, and the law of the EU - in order to identify issues of enforcement serving political interests, common interest and possible solutions. continue to block reforms. The government is Given that Moldova’s long-term integration essentially a “marriage of convenience” of perspectives are unlikely without (some kind various political and business competitors of) participation of Russia, the EU’s best and interests, although an important 4

distinction should be made between the political posts and access to economic Liberal Democratic Party of Vladimir Filat, and assets. ’s , although the Democratic Party of . no longer a coalition member, also opposes some key points of the EU agenda, such as Although relations in the government the introduction of the equal rights legislation coalition have improved, both Filat and or liberalisation of the air travel, while not Plathoniuc continue to lead from behind. Top being supportive of the DCFTA.1 political leaders (Speaker of the Parliament , Prime Minister Iurie Leancă, and The Party of Communists of the of Minister of Foreign Affairs and European Moldova (PCRM) was once called the only Integration Natalia Gherman) represent a pro-EU communist party, however, it has highly positive pro-EU face of Moldova, while turned rhetorically against the EU after in the shadow of pro-EU declarations there is becoming the opposition, partly as a result of a continuation of the old practices (capture the EU’s neglect and preoccupation with of power, rent-seeking) – as the price for “gluing” together its opponents in the keeping the pro-EU coalition together. To re- government. The party is believed to be in a gain public trust, the government should worse shape than it looks, its media holding target where it is the weakest: make the has been shrinking, its vast patron-client National Anti-Corruption Commission network in the regions has been eroding. The independent from the Government (and put currently entertained “velvet revolution” it under the Parliament), while at the same dream is rather a sign of weakness than a time the General Prosecutor’s Office and the show of viability. A decline of the PCRM justice system should be the main reform seems inevitable, while co-opting some of its targets. Not coincidentally, these posts are elements into the main political system and now held by the part of the coalition that was discourse may be possible. imported from the previous Communist government (via the Democratic Party of Vladimir Plahotniuc). Moldova’s economy could be doing much Moldova lacks the necessary political better if the following structural deficiencies framework to promote the European were addressed: a) capital: poor investment orientation, especially a viable political party climate causes scarce capital and thus system. Parties operate not as institutions, but reluctance of banks to give loans and further rather as reflection of politics as a life reduces access to capital; b) labour: turning strategy, a framework for achieving personal from advantage to disadvantage, goals and ambitions, with the country’s companies have problems finding benefits not being viewed as a priority. competent workforce due to poor education Political parties do not work to facilitate and supply and a gap between the demands of educate a new generation of politicians, but the market and employers; c) efficiency: serve to promote interests of a few politicians weak competition hampers the way in which (rent-seekers). The prime example of this sectors are combined in economy. It is practice is the Democratic Party: demanding concessions in return for their support for the 1 The Liberal Party was a member of the previous pro-EU coalition’s EU integration efforts has caused a coalition (Alliance for European Integration), however, its place in the current Pro-European Coalition, formed in May continuous negotiation and re-negotiation of 2013 after the AEI collapsed several months before, was taken up by the Liberal Reformist Party – a splinter group of former the balance of power and distribution of Liberal MPs led by Ion Hadârcă. 5

coupled with an oversized and inefficient of messaging the public opinion before the public sector, as well as a network of state- elections rather than as a real economic owned companies that work ineffectively. retaliation. Officially, there are around 190,000 Moldovan migrant workers staying in Russia in violation of the country’s immigration laws (mostly Party’s leaders and strategists (Mark Tkachuk) overstaying the 90 days limitation),2 meaning are captive towards Russian media and that more than half of the estimated 300- messages. Accordingly, their perception is: the 400,000 Moldovans working in Russia could Western decline and the Eastern ascent be legally deported virtually at any time. embedded in the Customs Union, cheap energy and cheap loans. The PCRM’s Russia, though, is unlikely to opt for mass constituency is Soviet nostalgic and mostly deportations of Moldovan migrant workers Russian speakers. At the same time, however, because of the consequent shortage of the PCRM is not necessarily a viable partner workforce and concerns over the associated and ally for Russia: there is a profound mistrust bad image. However, it still may expel smaller between , the party’s leader, groups of Moldovan citizens to unsettle the and Mark Tkachuk and Moscow. While public opinion. opposing the EU, the PCRM is also not willing to make itself a hostage to Russia: in case it DCFTA vs. Customs Union: The CSU promises would be able to form the next government it short-term benefits for Moldova, mostly is most likely to follow a two-vector policy - cheaper energy as gas prices could possibly between the EU and Russia – similarly to go down by 20-30%. Russia could indeed Belarus and Ukraine. That would not exclude decide to remove its export tariffs applied to the continuation of the association process gas exports; however, such a decision would with the EU, but would need to be depend on Russia’s political will, since gas taken as more neutral. prices are not included in the CSU deal. CSU Russian wine ban is estimated to have cost standards for adapting to the Russian market the Moldovan economy $6.6 million so far would be easier for Moldovan companies to and is expected to have a relatively small meet, especially in the agriculture sector, overall impact: Moldova’s sales of alcoholic where about one third of Moldovans are products to Russia were worth around $60-80 employed. CSU would also facilitate labour million in 2012 and accounted for 3-4% of the migration: about a half of migrants is working country’s total exports, and for 30% of its wine in Russia and about a half of remittances sector’s exports. Compared to the first Russian come from Russia. Moldova’s geopolitical wine ban in 2006, most Moldovan wine interests would converge with those of producing companies are now less indebted Transnistria and Gagauzia, mitigating existing and less vulnerable to disruptions in cash tensions. Costs outpace benefits, though: CSU flows. This ban will further push the implies a higher, deeper form of integration winemakers to look for new EU markets. than DCFTA. It would introduce Russian However, other potential Russian retaliation custom tariffs to Moldova. These are much measures, such as banning fruits (6% of trade) more restrictive and 2.7-times higher than the and expelling migrant workers, would be much harsher for the Moldovan economy. 2 See Kamil Całus, Russia Announces New Sanctions Against The wine ban thus serves a political purpose Moldova, Centre for Eastern Studies, October 2, 2013, http://www.osw.waw.pl/en/publikacje/analyses/2013-10- 02/russia-announces-new-sanctions-against-moldova. 6

DCFTA, on the other hand, would boost Moldova’s GDP by 6.4% 5 with the main Moldova is passing through a revival after a sources of growth in more exports, higher recession last year (0,8% contraction of the real consumption and investments. Larger exports GDP): this year the GDP growth should be would be triggered by the EU’s removal of around 5-6 %, being driven mainly by the remaining restrictions for Moldovan compensatory growth in agriculture, but also by revival in consumption fuelled by exports, especially for the agriculture and remittances and wage growth. In 2014 and in food sector, as well as products of animal the medium-term forecast, the growth should origin (currently banned from access to the be more modest (3-4%), based on the same EU) – in case the necessary sanitary and factors as in the past years: fuelled by phytosanitary standards (SPS) are met. The continued growth of consumption and gradual winding down of the existing customs investment, covered by growth of remittances. tariffs for imports would imply lower prices for This is enough for survival, although, in terms of imports, depending on the product. Lower catching up with its Eastern peers, Moldova prices would fuel consumption, which again should grow twice as fast. would fuel economic growth. Cheaper current Moldovan ones, causing higher prices imports would apply also to raw materials on imports. This would apply to consumer and technologies that are fundamental for products (causing rising inflation, paid by the economy – e.g. the automotive or textile consumers), as well as to the most expensive industries. DCFTA would also have its costs, innovations and technology from the West, with the agriculture sector being most thus further hampering Moldova’s long-term vulnerable. Currently there are some competitiveness. This would also prompt the protectionist government measures, e.g. high EU to cancel the current trade preferences import tariffs applied to protect a number of for Moldova. Moldovan producers - both companies within the sector which are not from left and right bank – would be less competitive enough. Lifting these measures competitive and would lose their most would expose this sector to a important market the EU. Less trade, less competitiveness shock. DCFTA would mean a investment, higher prices and less 3% decline6 in agricultural production, while consumption would lower the country’s GDP adopting new SPS would mean a short-term by 9.7-13.2%3 (based on modelling on three increase of production costs by around 8%.7 different scenarios4). Moldova would in turn This would likely lead to a short-term price become dependent on Russian aid, increase. Russia could make the situation essentially making the country another worse with a ban on Moldovan agricultural Transnistria. products and foodstuffs. DCFTA costs can be mitigated by: a)

3 See Valeriu Prohnitchi, Strategic Comparison of Moldova’s liberalising the business environment to Integration Options: Deep and Comprehensive Economic ensure fluent migration of production factors Integration With the EU Versus The Accession to the Russia- Belarus-Kazakhstan Customs Union, Expert-Grup, June 7, 2012, from industries which would suffer to industries http://pasos.org/wp-content/uploads/2012/06/Moldov a- which would benefit; b) investing into DCFTA_versus_RBK_CU_English.pdf. agriculture in order to mitigate “shock” from 4 Cost-benefit analysis of the two options – DCFTA versus CSU – was modelled on three different scenarios: a.) DCFTA (Deep and Comprehensive Free Trade Agreement), b.) RBK (Customs Union), and c.) RBK_GAS (Customs Union with a 10% discount 5 Ibid. to the import price for Moldova pays for gas from Russia). See 6 Ibid. Prohnitchi. 7 Ibid. 7

DCFTA; c) increasing communication about the agriculture sector a ten-year transition DCFTA requirements, especially in rural areas period for most vulnerable products (Turkey, and Transnistria, where information vacuum is for example, did not negotiate such a the greatest; d) modernizing the infrastructure clause). – currently only a small proportion of Energy prices are out of the Customs Union’s standards in Moldova are harmonised with scope – lowering the gas price remains those of the EU, which creates an important dependent on the political will of Russia even non-tariff barrier for Moldovan producers, in case of CSU accession. At the same time, restricting their competitiveness. The EU despite the political declarations, Moldova should focus (conditionality) on will not gain energy security through implementation of economic reforms aimed completing the recently launched at business environment and assist with construction of the Iasi-Ungheni pipeline. The modernizing the infrastructure. Moldova also reason for that is not the lack of gas on the negotiated advantageous conditions for Romanian side, as most of critics of this implementing the DCFTA provisions, granting project claim, 8 but the fact that the Iasi- DCFTA vs. CSU Ungheni interconnector will be able to work at just 10% of its planned construction CSU capacity of 1.5 bcm of gas a year (amount  Gas prices possibly lower by 20-30% necessary to meet Moldova’s total energy (though not included in the CSU needs) until the necessary additional deal). infrastructure is in place. Achieving a genuine  Standards easier to meet for Moldovan companies energy independence from Russia would Benefits  Migration easier for Moldovan citizens require construction of a new compression  Moldova’s geopolitical interests station at Ungheni (with costs estimated at convergent with those of Transnistria around €20 million) and a 120-km gas and Gagauzia pipeline running from Ungheni directly to  Customs tariffs 2.7-times higher Chisinau (with costs estimated at €80-170  Current trade preferences to Moldova million), with the construction work expected cancelled by the EU to take at least five years. Costs  Moldovan producers from both banks less competitive on the EU market Moldova’s transmission and distribution  Moldova’s GDP lower by 9.7-13.2% network, owned by Moldova-GAZ company, DCFTA is not controlled by Chisinau, but by the company’s main shareholder – Russia’s  Agriculture production lower by 3%, Gazprom. Its influence over the energy sector production costs higher in short-term

by 8% would diminish only if Moldova adopted the Costs  Potential ban on agriculture and EU’s Third Energy Package. This would allow foodstuffs exports to Russia the country to break up Moldova-GAZ  Potential worsening of relations with monopoly. The adoption of the Package, Russia in migration, trade and energy sectors however, will not happen before 2020. What Chisinau can do immediately is to adopt a  Restrictions on Moldovan exports to suitable energy security strategy focusing on the EU lifted Benefits  Cheaper imports of products, raw materials and technologies 8 has contracted more Russian gas than it needs at the moment, however it still needs to pay for the unused  Moldova’s GDP higher by 6.4% supplies because of the take-or-pay clause. 8

saving, effectiveness, awareness-rising of space has been dominated by Russian energy challenges, and taking into account information, influence, information outlets also electric energy. The EU step to invest into and public television. Also, the number of a back-to-back station on the Vulcanesti- pro-Russia NGOs active on the ground with Isaccea grid would allow Moldova to the necessary resources has increased. The increase electricity imports from Romania to Russian Orthodox Church is one of the most up to a half of its yearly power consumption.9 powerful soft power tools: some representatives of the Church consciously promote a policy of aligning the EU with the Polls suggest that the civilizational choice “homosexual agenda”. between the European and Eurasian models However, many of the pro-Russia supporters has not been made yet, despite the are situational and could switch back to impressive pro-European rally on November supporting a different vector under different 3, 2013 – a gathering that the PRCM was not conditions. Russia also suffers from a able to match on November 23, 2013. The “diversity” of interpretations of its position.10 pro-European constituency should, however, Moldova watchers are often confused about not campaign with the “now or never” what the official Russian position actually is: is narrative – increasing the stakes may it the position expressed by officials of the backfire, given this is a long-term process. Ministry of Foreign Affairs, by Dmitry Rogozin, The most sensitive questions are not being the Vice-Deputy Prime Minister of the Russian addressed, leaving the door wide open for Government and the Special Representative opponents. What will Moldova’s European for Transnistria, or by the Government path mean for Gagauzia? This is a major representatives? Rogozin is perceived in question which needs to be discussed much Russia as too conservative, too populist, too more substantively by the Moldovan elites. ambitious and not representing the This applies also to Transnistria and the whole government`s line. Although with Putin’s Russian-speaking population: why would it be return the conservative line has become the better for them, if the European path mainstream, Putin is still more moderate than overrides their Soviet nostalgia and ideals of most of the stakeholders around Transnistria. better times back then? This nostalgia does Russia’s long-term objective is a reunited exist and this part of population needs its Moldova integrated into the Russian project. motivation, too. Much more homework is left However, the best option for Russia’s interest to do in the area of historical reconciliation would be a reunified Moldova in the EU with such as legacy of the World War II, or two official languages – thus Russian hanging over the Transnistria issue. This would becoming an official EU language in a very be a task for an effectively functioning civil long-term perspective. At the moment, society. however, there are no indications that such a Moscow is most likely to intensify its current policy would be chosen/formulated by the efforts. It has been ratcheting up its soft government. The first indication of such a power arsenal - until now most of the public change would be a shift to moderation in the

10 See more about this: Philip Remler, Negotiations Gone Bad: 9 See Statement by President Barroso following his meeting with Russia, and Crossed Communication, Carnegie the Prime Minister of Romania, Victor Ponta, and the Prime Europe, August 21, 2013, Minister of Moldova, Iurie Leancă, November 15, 2103 http://carnegieeurope.eu/2013/08/20/negotiation-gone-bad- http://europa.eu/rapid/press-release_SPEECH-13-929_en.htm. russia-germany-and-crossed-communication s/gjd2. 9

communication on the Russian side, this and improvement of transportation to the EU being not left to Rogozin only. (new and cheaper flights – e.g. flights to now at around €100) are tangible. Moldova is also only the second country in the The “success story” narrative has been a neighbourhood after Israel to join the 7th damaging one; however, after the Ukrainian Framework Programme for Research (FP7). suspension of the Association Agreement There will be some necessary changes in the there is a great risk of it being only further EU assistance focus in Moldova: a) selection strengthened. The narrative has created a of only three main sectors of assistance; b) feeling in the ruling coalition that Brussels better focus on monitoring and not only on needs a “success story” to justify the Eastern the checklists; c) alignment of the EU Partnership, rendering it willing to relax the assistance with political priorities: focus on conditionality. As a result, for the sake of cases of corruption, non-implementation of holding the pro-EU coalition together, many reforms, and so on. But the EU is suffering from aspects of the rule of law were overlooked by a lack of monitoring capacity. According to the EU, the Presidential crisis of 2011-12 being the new monitoring guidelines, conditionality a major example. for budget support operations will be made The timeframe for the association process public to enable monitoring by the civil speaks volumes against the “now or never” society at large. This will be progressive and narrative: 2015 could be a clear target for also implies building NGO capacity in some the Association Agreement ratification and sectors where there are only very few good for the visa-free regime (ratification may take civil society actors active. Speaking Russian up one year by member states). The AA should be a part of the agenda and, at the implementation may take between 7 to 10 same time, the EU needs to better streamline years, thus there is a transition period when a member states activities. To achieve this, EU lot of work and progress on re-integration of member states’ missions in Chisinau, under Transnistria could be made. the coordination of the EU Delegation, have The EU has realised the need for both created a Communication Task Force to increasing the deliverables and better inform Moldovans about EU integration communicating them better. Brussels has put issues, paying more attention to the Russian- forward the visa liberalization deal with speaking population in the regions. Chisinau and identified two key energy The EU, at local level, can even try to “work it projects on November 15, 2013. The EU out right” with Russia: while becoming an EU- assistance has also been booming: in 2013 it associated country, it should be in Moldova’s will reach €104 million, with an additional interest to have the best possible relationship possible top-up of €35 million under the more- and economic cooperation with Russia. for-more principle, making Moldova the Moldova can neither play a zero-sum game largest EU assistance recipient country in the nor can it afford to be fully dependent on the neighbourhood per capita. Improvement of EU for trade and aid. On the contrary, roads (the EU together with the European Moldova could follow the model of having Bank for Reconstruction and Development the AA with the EU while having an FTA with and European Investment Bank), investments Russia, like Serbia, for the necessary initial in the hospital and health care sector, signing years. EU aspirations with good relations with of the Comprehensive Aviation Agreement Russia at the same time are not necessarily 10

mutually exclusive – the zero-sum approach handy incentives for engaged actors to makes them seem this way, though. accept the status quo. Now, the association Essentially, the Moldova’s EU association process offers a new opportunity to re-shape process is similar to the EU`s “Partnership for the Transnistria process as well. Modernisation” with Russia, and the two Transnistria trades significantly with the EU and processes could be further inter-connected the right bank: 35.8% of Transnistria’s trade is when it comes to standards and other with Moldova proper, 29.1% is with the EU, technical issues. It would also help the Russian 8.5% with Ukraine, while only 22.2% of the side better understand the process the EaP trade is with Russia. 12 Moldova`s interest countries are going through, and would in should be to have Transnistrian companies turn help the EaP countries better construct continue their trade with the EU under the their relations with Russia on principles that DCFTA framework as well. Given that would be known to everyone, as everyone Transnistria relies heavily on import customs would be involved in the process. Even duties as a major income (one third of its though Russia fuels the zero-sum game, the public revenues), lifting the duties from the EU EU – as a much bigger actor – should not would be a heavy shock. In case of no follow such tactics. In this regard, as much as mitigation, Transnistria’s dependence on there is no unified Russian policy Russia will deepen, accelerate economic enforcement, the individual interests and decay, and widen division with Moldova attitudes of member states should be much proper. Because Transnistria is highly sensitive better coordinated. to investment, the Moldovan government But because of the EU’s behaviour and could start by commissioning an analysis on rhetoric (irreversibility) around the EaP the costs (and benefits) of Transnistria’s re- Summit, Russia feels intimidated and in the integration. This would be a starting point to corner. At the same time it implicitly develop incentives to move away from the acknowledges that the EU has become the status quo and propose (and well advertise) most influential public player in the region. a Transnistrian Re-Integration Fund to Yet, while the Russian media talk about losing guarantee the mitigation of the transition the region, the ordinary are much costs. more indifferent.11 What the re-integration policy lacks is a clear roadmap dealing with concrete issues: how does Chisinau plan to re-integrate and How geopolitics is providing excuses for merge the banking systems or the social inaction is best visible on Transnistria. The security schemes? How does it plan to invest government of Moldova should have had a into the infrastructure re-shuffle and who will more coordinated and more thought- bear the re-integration costs? At least the through policy with regards to Transnistria, as Bureau of Reintegration, a key institution in well as a clearer plan on a re-integration (formally) coordinating the ministries in terms strategy. True, the geopolitical context has of Transnistria, should have an answer to one not been permissive, but this also created

11 See a fresh Levada poll about Russians attitude toward Ukraine and the Association Agreement with the EU. 50% of the 12 See Economics, The Impact of the EU-Moldova DCFTA population is neutral on the issue, 30% is against, and 3% on the Transnistrian Economy: Quantitative Assessment under supportive: http://www.levada.ru/24-11-2013/soglashenie-ob- Three Scenarios, June 4, 2013, assotsiirovannom-chlenstve-ukrainy-v-es. http://get-moldau.de/download/policypapers/. 11

question: what will be done if Tiraspol decides The EU should consider express reintegration for a common state with Chisinau tomorrow? as a condition for a final membership perspective of Moldova. Brussels is already Transnistrian television is indeed holding a communicating the “no more Cyprus” campaign to show how concerned Tiraspol is message. Leaving the Transnistria issue frozen with the upcoming DCFTA and how and not making it a condition for following competitive the Transnistrian businesses are, the EU integration would add to the PR hype including on the EU markets. Yet, the around the Eastern Partnership, but not to its Transnistrian administration is unwilling or seriousness. Moldova needs to start with unable to develop a reliable strategy in order things that do not cost at all: improve inter- to protect against the negative economic sectorial communication on Transnistria and effects of DCFTA implementation. Instead, it is include messages for Transnistria into political putting pressure on Moldova in order to speeches of the country’s representatives. obtain strategic and tactical advantages, particularly little and formal signs of A reform of the peacekeeping (i.e. Russian) “recognition”. mission in Transnistria based on the international standards should be also on the Good faith effort, though, should follow and table then – many of the peacekeepers are become a policy: Moldovan team of EU Transnistrian citizens with Russian passport, negotiators should provide Transnistria with virtually being stationed at home. The main copies of all documents related to the DCFTA question is whether there will be efforts to – translated into Russian. As of now, destabilise the political situation in Moldova Transnistrian companies are required only to before the elections through Transnistria. register in Chisinau in order to gain access to the market. However, once the DCFTA is in Ukraine’s importance would be increased in force, higher quality standards will need to case the DCFTA would enter into force along be met in order for them to operate there. with Moldova, surrounding Transnistria within The fact that the EU has available the the EU framework. The Ukrainian request to necessary support for Transnistria to prepare open a consulate in Tiraspol could be for the DCFTA should be advertised as loud considered in exchange for a more intensive as possible. Moreover, each policy of sharing of border authorities’ information with Moldova should have a Transnistrian element, Moldova. Ukraine could also play a bigger line ministries should work on it and role in reforming of the peacekeeping mission coordination at the governmental level in Transnistria. should be done by the Bureau for If there is a solution to be found on the Reintegration. Moldova should also be ready common state for Chisinau and Tiraspol, this to support Transnistria’s interest in the EU, may be achieved on the platform offered by should it appear. Working groups in the Organisation for Security and confidence-building could be used for that Cooperation in Europe (OSCE). OSCE purpose, while at the same time appropriate members should invest in strengthening the information should be provided to the public, organisation’s presence in this region, where pressuring Transnistria to more cooperation by it can play a crucial role, given the political increasing interest of the society. Every step constraints faced by the EU, and, even more to isolate the region more will only increase so, by NATO. future costs of re-integration, as Transnistria simply has nowhere to go. 12

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The Slovak Atlantic Commission (SAC) is an independent, non-partisan, non-governmental organization that has been giving Central Europe a powerful voice in the foreign policy debate for the past two decades. With the understanding that transnational challenges require international solutions, the Commission supports deeper regional, European and transatlantic cooperation on the basis of instrumental values, particularly democracy, individual liberty and the rule of law. The Central European Policy Institute (CEPI) is a regional think-tank established and run by SAC based in Bratislava, Slovakia. Its mission is to help decision-makers and opinion-makers in Central Europe craft common responses to current challenges, and to improve the quality of their contributions to the Euro-Atlantic debates. It does so by engaging the region’s top experts and institutions, promoting innovative solutions, and working closely with governments to turn recommendations into policy. The Eastern Europe Studies Centre (EESC) is a non-governmental, non-profit organization aiming to build civil society and promote democracy in Eastern Europe by monitoring and researching political, economic, and social developments in the region, and by developing qualitative analyses of them. EESC organizes conferences, seminars, and round-table discussions regarding issues relevant to civil society and democracy; it trains people in areas relevant to its mission; and it also offers consultations and recommendations to individuals and organizations cooperating with Belarus, Ukraine, Moldova, and Georgia. EESC specializes in the EU Eastern neighbourhood policy.

The “Reality Check” initiative is supported by the Konrad Adenauer Stiftung (Germany), Pact (US), International Visegrad Fund and the Ministry of Foreign Affairs of Lithuania. Partners of the initiative are the Eastern Europe Studies Centre (Lithuania), Centre for Eastern Studies (Poland), Hungarian Institute of International Relations (Hungary), EUROPEUM Institute for European Policy (Czech Republic), Levan Mikeladze Foundation (Georgia) and IDIS Viitorul (Moldova). Disclaimer: The views and opinions expressed herein do not necessarily reflect those of the project´s supporters or partners.

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