From EU ”Poster Child” to a Dysfunctional State? Assessing the situation in Moldova

The Finnish Institute of International Affairs · 26.04.2016 10:00 - 11:30

For a considerable period of time Moldova was perceived as a most promising candidate to play the role of a success story in the EU’s policy in the Eastern Neighbourhood. It concluded an Association Agreement with the EU and was the first country in the region to which Brussels granted the visa-free regime. Moreover, at least some hope was seen for an eventual resolution of the conflict in Transnistria. This positive picture, however, shattered when corrupt practices and the in-fighting within the ruling governmental coalition placed the country at risk of an oligarchic state capture and a protracted political crisis – if not a total state failure. The seminar arranged at the Finnish Institute of International Affairs will look into the current political situation in Moldova in order to understand whether and how the European orientation of the country and its reform process could be sustained. Also, the event will aim at assessing what has gone right or wrong in the EU policy towards Moldova.
Ryhor Nizhnikau, PhD candidate, the Skytte Institute, University of Tartu
Päivi Peltokoski, Director of Unit for Eastern Europe and Central Asia, the Ministry for Foreign Affairs of Finland
Kristi Raik, Senior Research Fellow, the Finnish Institute of International Affairs
Arkady Moshes, Programme Director, the Finnish Institute of International Affairs

Summary of the seminar

Programme Director Arkady Moshes from the Finnish Institute of International Affairs noted how pleased he was to organise a seminar with the topic of Moldova. The unfortunate reality is that Finnish and most of the European countries ignore Moldova in its media coverage, which makes it even more important to pay attention to this country. During many years Moldova was seen as a positive example for the EU’s Eastern Neighbourhood policy, but the realities have changed. Moldova is now facing serious domestic challenges that could at worst lead to state collapse. The enormous amount of protesters in the streets is a sign of the turmoil the country is going through, and these protests will continue since the current government has a low ability to find a shared view with the people. Of course the country’s location is also of importance, since it is part of Europe’s geopolitical setting. The security in the region is threatened among other things by recent events in Odessa, where a peaceful protest was attacked with violence. Moshes wanted to underline that Moldova is entering a dramatic phase in its history and it is not getting the attention it needs. According to Moshes, the EU needs to rethink its role and reconsider the negative signals it is sending on holding elections in the region, which are a basis for a democratic state. He also noted the limits of the stress on ”co-ownership” in the EU’s approach to the Eastern neighbours in general, since this may effectively give the partners the veto power and lead to the prioritisation of their agenda and not that of the EU.

Ryhor Nizhnikau, PhD candidate at the Skytte Institute, University of Tartu, expressed his gratitude to participate in this event and stated that Moldova does not receive the attention it needs. Nizhnikau began his presentation by explaining the domestic turmoil that is taking place in Moldova, which derives from domestic constraints, EU policies and Russian actions. Furthermore he analysed the EU’s role and its contribution in Moldova. When the Eastern Partnership initiative was founded, one of the central goals for the EU was more security in the region. However, according to Nizhnikau Moldova is now facing more challenges regarding security, democracy and stability than before. He also sees the EU’s rhetoric on Moldova as problematic. For a long time Moldova was regarded as a promising candidate in the EU’s Eastern Neighbourhood policy, but then the EU’s rhetoric took a turn and it started criticising Moldova for state capture. Moreover, this inflamed atmosphere is aggravated by deep internal divisions amongst Moldovans.

Nizhnikau mentioned the institutional models in the country as one of the fundamental challenges and brakes for reforms. The institutions lack accountability of the government and the rule of law; they are open to corruption and include state capture. The political system is very elite-based due to the high cost of forming a political party. The oligarchs exist in the political system only to serve and promote their own economic interests. He also noted that this system was in place already before the Eastern Partnership initiative.

Nizhnikau stated that since 2009 there has been a transformation from indirect to direct state capture, which means that previously the oligarchs were mainly having an influence on politics from outside the political system, whereas now they are in the government. This development has led to increased corruption and poverty. The second transformation was the direct competition between the oligarchs within the government and the attempt to consolidate power by Vlad Plahotniuc since the arrest of his coalition partner and key opponent, oligarch Vlad Filat. The system is thus dominated by oligarchs that control the judiciary, the central bank, institutions such as economic, fiscal and customs agencies and the parliament. However, due to the constitutional reform, the control over the presidential office becomes the source of contention until the election. Regarding the upcoming presidential elections, Nizhnikau said that it still unclear who will win and he also wondered what the public’s opinion will be since there have been protests since September 2015.

After 2009 the political parties in Moldova became very politicised and political actors are now strongly categorised by their pro-EU or pro-Russia stance. The EU’s policies have not been helpful in making institutional transformations because the EU promotes change through a top-down approach: through conditionality, supporting the elite and partnering with the pro-EU elite. Promises of visa liberalisations and capacity-building assistance were made, provided the necessary changes were implemented. However, only part of the needed reforms were completed. The institutional model in Moldova suffers from a disjunction between formal structures promoted by the EU and domestic informal structures. For example the EU’s capacity-building assistance is been manipulated by the oligarchs for their personal agendas.

Nizhnikau’s solution for the EU’s approach on Moldova is a combined model, consisting of a top-down and a bottom-up strategy. This means not just the use of conditionality as a policy tool. It means keeping strict rules on freezing aid supplies when necessary but applying long term strategies when it comes to more empowerment and bottom-up involvement in monitoring and rulemaking of the non-state stakeholders, not only the (pro-EU) elite. He also mentioned that the people’s support for the EU has dropped dramatically and continues to do so. In conclusion, he noted that if the EU wants to contribute to making the government more accountable, it should address the need for further dismantling of the institutional framework, promote the re-distribution of power and empower non-state actors to engage in rulemaking.

Päivi Peltokoski, Director of Unit for Eastern Europe and Central Asia at the Ministry for Foreign Affairs of Finland, also mentioned in her opening remarks that Moldova is not discussed in Finland as much as it should be, only usually in relation to the Eastern Partnership. As previously noted, Moldova used to be perceived as a model country in the Eastern Partnership. At the time it had flexible governments that cooperated with the EU. Moldova also received notable funding from the EU, and the EU bilateral assistance sharply increased from 40 million euros to 131 million euros between 2007 and 2014.

According to Peltokoski, it is essential that the EU does not make unrealistic promises to the Eastern Partnership countries, such as the so-called European perspective eventually leading to the EU membership. She noted that the Association Agreement is a positive development and that Moldova was the first country in the region to receive visa freedom in 2014 because it met the criteria in its Visa Liberalisation Action Plan (VLAP). More democracy and prosperity would follow if the reforms were implemented fully.

Last year Moldova faced several crises of which the institutional crisis is the most fundamental since it is impacting all the other crises. Moldova is the poorest country in Europe, still needing development aid. Last year, Finland allocated 750 000 euros for development cooperation in Moldova.

According to Peltokoski, mistakes were made when the Moldovan government promoted Moldova to the EU but failed to promote it to its citizens. The struggles to complete and implement fundamental reforms, the strengthening of the oligarchs and a failing economy are showing an alarming development, but Peltokoski says that the EU has awakened and started acting. In 2015, the EU increased the pressure on the government and froze budget funding. Now the key is trust-building not only between the Moldovan government and its citizens, but also between the government and the EU. The new government is actively looking for channels to rebuild the trust. Peltokoski stated that it is crucial for the EU to have a coherent message and that the outcome is important. It should not be a question of whether the Moldovan governments are pro-European or not – it is crucial that they are pro-Moldovan.

Peltokoski concluded by remarking that EU should continue with conditionality and that co-ownership is needed. Furthermore, the EU should continue promoting democratic values and the EU’s policy should be adjusted to the current realities, however it is only Moldova itself that can go through the implementation of reforms. The Moldovan government should be encouraged to have a dialogue with all actors in the country. The EU will monitor the state of the reforms and the presidential elections in October where the spirit of democracy must be respected.

Kristi Raik, Senior Research Fellow at the Finnish Institute of International Affairs, started her presentation by looking back to her own experiences in Moldova in 2008 and 2009. It is important to understand how Moldova has developed since it is a highly divided state. According to Raik, the political crisis back then was not about pro-EU against pro-Russian forces. The ruling Communist Party had a close relationship with the EU, even though they did not go through with the needed reforms and demands of democracy. In this sense, they were superficially pro-EU but not anti-Russian. Raik also pointed out that Moldova was the only country that wanted to become a Balkan country, because of the EU’s enlargement policies. The main dividing line, still relevant today, is between pro-reform forces and Soviet nostalgia. The longing for ”the good old days” is still after 25 years very strong whereas others see the need for reforms which can be achieved only through support from the West and the EU. When pro-EU forces came to power, which increased EU support to Moldova, some reforms were made, among others the visa liberalisation process, however the lack of rule of law and corrupt practices of the post-Soviet elite was still present.

Recently the dividing lines have been changing. Now the discredited old elite are facing new political groups and protesters including both pro-EU and pro-Russia forces. The latter also claim to be anti-corruption, which is not credible. The internal divisions are further complicated by the Romania factor, which many Moldovans see negatively because of reunification rhetoric. Romania’s approach has become more pragmatic, so they cooperate with the oligarchs. Regarding support for pro-Russian forces, Raik stated that some people support them for security reasons, since the EU is regarded as not capable of protecting Eastern Partnership countries from Russia’s actions. The fear of provoking Russia by supporting pro-EU forces and the fear of war are real issues in this regard. According to Raik, Moldova is not seen as an important state by Russia, but Russia has a lot of power over the country due to its links to political groups, Moldova’s energy dependence on Russia as well as the issue of Transnistria. Economically the Deep and Comprehensive Free Trade Agreement with the EU covers also Transnistria, and as long as Russia does not intervene with force, this is a beneficial development for Transnistria and the whole of Moldova. On EU’s role in the region, Raik noted that the EU had unrealistic expectations of its influence in the region, where they thought that they could change the region without offering much to Moldova and other Eastern partners. EU is in the region long term, and rather than being a geopolitical player it should continue insisting on reforms and give its support for creating more justice and welfare. To conclude, Raik stated that the EU should not operate as an ally of a specific political group, rather it should cooperate and open dialogues with all different political groups and avoid special partnerships with superficially pro-EU parties.