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The Case of Moldova Assessing the State of European Integration and Potential for Transatlantic Cooperation in the Post-Soviet Space: The Case of Moldova Iulian Groza, Mathias Jopp, Iurie Leancă, Julian Rusu, Hans-Martin Sieg Research Paper No 02/17 This study was prepared as part of the Project “German-American Dialogue on the Post-Soviet Space: Assessing the State of European Integration and Potential for Transatlantic Cooperation – the Case of Moldova” supported by the Transatlantik-Programm of the Federal Republic of Germany, funded by the Federal Ministry for Economic Affairs and Energy (BMWi) through means of the European Recovery Program (ERP). The views expressed in the Study are the views of the authors alone. IEP Research Paper No 02/17 About the author Iulian Groza is Executive Director of the the Institute for European Policies and Reforms (IPRE), Chișinau Mathias Jopp is Director of the Institut für Europäische Politik (IEP), Berlin Iurie Leancă is Former Prime-minister of the Republic of Moldova and Member of Parliament of the Republic of Moldova, Chișinau Iulian Rusu is Associate Expert on European integration policies at the Institute for European Policies and Reforms (IPRE), Chișinau Hans-Martin Sieg is Associate Fellow at the German Council on Foreign Relations (DGAP), Berlin. About the project The project: “German-American Dialogue on the Post-Soviet Space: Assessing the State of European Integration and Potential for Transatlantic Cooperation – the Case of Moldova” seeks to foster a transatlantic dialogue on the post-Soviet space and is implemented in co-operation with the German Marshall Fund of the United States (GMF). The project aims at reviewing policies and instruments of Germany, in the framework of the European Neighbourhood Policy and the Eastern Partnership and those of the U.S., both with respect to their capacity to support transformation processes in the post-Soviet space. It further seeks to create synergies between German and American approaches to the region and to identify the specific domestic obstacles to transformation within the countries of the Eastern Partnership (EaP). Within a series of four dialogue workshops, to be held in Berlin and Washington, the dialogue and exchange between representatives from the U.S., Germany and other EU member states and the target countries of the Eastern Partnership will be promoted. About the IEP Since 1959, the Institut für Europäische Politik (IEP) has been active in the field of European integration as a non-profit organisation. It is one of Germany’s leading research institutes on foreign and European policy. IEP works at the interface of academia, politics, administration, and civic education. In doing so, IEP’s task include scientific analyses of problems surrounding European politics and integration, as well as promotion of the practical application of its research findings. |www.iep-berlin.de IEP Research Paper No 02/17 Table of Contents Executive Summary 5 Introduction 8 A. Overview on the European Integration process in Moldova (2009-2016) 10 I. EU-Moldova relations before 2009 10 II. Increased EU-Moldova cooperation (2010-2014) 11 III. The implementation of the EU-Moldova Association Agreement 13 B. Mapping the transatlantic policies and instruments to support transformation in Moldova 16 I. USA policies and instruments 16 1. General figures ........................................................... .16 2. Political dialogue and reform (Reform, Justice and Home Affairs, Security and Defense, Reintegration) ................................................... .16 3. Trade and energy ......................................................... .18 4. Financial assistance (Infrastructure projects) ................................ .19 II. EU policies and instruments 19 1. General figures ........................................................... .19 2. Political dialogue and reform (Reform, Justice and Home Affairs, Security, Reintegration) ........................................................... .20 3. Security and home affairs ................................................. .21 4. Trade and energy ......................................................... .22 5. Financial assistance (Infrastructure projects) ................................ .23 III. Analysis of the impact of the EU and US support for transformation in Moldova 24 1. General presentation on coordinated assistance ............................. .24 2. Political dialogue ......................................................... .26 3. Promotion of the reform agenda ........................................... .26 4. Justice reform and the fight against corruption .............................. .26 5. Trade and energy ......................................................... .28 6. Financial assistance (infrastructure projects) ................................ .29 7. Security and defense ..................................................... .30 8. Electoral processes and the building up of party democracy .................. .30 C. Key challenges for the sustainable transformation process in Moldova 31 I. Corruption and politicisation of state institutions 32 II. Press freedom: from “not free” to “partially free” – however largely politically affiliated or influenced by Russian media content 35 III. Rent-seeking economy 37 IV. European integration between a reforms-driven agenda and geopolitical vectors 38 3 IEP Research Paper No 02/17 D. Conclusions: Priorities of transatlantic cooperation for a stronger support to the transformation process in Moldova 40 I. Analytical Framework: From support to co-ownership by an effective combination of internal and external pressure 40 II. Risk assessment 43 III. Association Agreement and DCFTA with the EU – a key leverage instrument to create irreversibility of the transformation 44 IV. Upgrading conditionality 45 1. Employing the political leverage of the EU and US ........................... .45 2. Defining a concrete reform agenda ........................................ .45 3. Focusing on key reform areas/game-changer reforms ....................... .46 V. Personnel policies 47 1. Selecting the leadership of key institutions ................................. .47 2. Public service reforms .................................................... .47 VI. Capacitate constitutional and state authorities 48 1. Ways to capacitate reform forces in government ............................. .48 2. Capitalize on the diaspora potential in ensuring sustainable transformation ... .49 3. International support to strengthen rule of law in the Republic of Moldova .... .50 4. Financial banking sector and offshore jurisdictions .......................... .52 VII. Strengthening democratic competition 53 1. Support party building and more active civic and political participation ....... .53 2. Support to build independent media and improved communication .......... .55 4 IEP Research Paper No 02/17 Assessing the State of European Integration and Potenti- al for Transatlantic Cooperation in the Post-Soviet Space: The Case of Moldova Iulian Groza, Mathias Jopp, Iurie Leancă, Iulian Rusu, Hans-Martin Sieg who have consolidated their positions in Moldovan Executive Summary politics. This environment was used for raiders attacks in the banking and financial sectors of the country since 2012 in particular, money-laundering The study assesses the state of affairs of the transatlantic schemes like the “Magnitski case” and the banking cooperation to support the transformation process fraud that was discovered in autumn 2014. All of in the Republic of Moldova, as a case study for the these ultimately threw Moldova into governmental, post-Soviet space. For this purpose, the authors economic, financial and social crises that unfolded in reviewed the course of European integration and 2015. The effects are still and probably will be felt for reform process in the Republic of Moldova, since years in advance. Essentially, since 2009 the political mid-2009, when the declared liberal-democrat pro- system turned from semi-authoritarianism towards European and pro-reform Coalition replaced the eight increased oligarchic control and effective privatization years of Communist rule. The study maps out and of state functions and institutions. Consequently, analyzes the impact of the US and the EU support to the Europeanization of Moldova remained largely transformation reforms in the Republic of Moldova as superficial, as the rapprochement between Moldova well, arguing for a stronger transatlantic coordination and its Western partners during this time contrasts of development support. Finally, before formulating a with the desire for progress in strengthening liberal set of recommendations for the way ahead to upgrade democracy, the market economy and the rule of the transatlantic approach in Moldova to overcome law. The key domestic obstacle for transformation resistance against real change, the study outlines the has proven to be the veto power of vested interests. key challenges why the transformation processes fell It rests on systemic corruption and oligarchic control short of expectations. over large parts of the economy, state institutions and political parties – which, in effect, have largely The internal perception and external image of Moldova bypassed or instrumentalised both democratic in particular during 2015 dropped from the success processes and constitutional authorities. The extent story of the Eastern Partnership of the EU to a country of these challenges and the resulting veto
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