“Everything’s Very Bad”. Why Moldova Urgently Needs European Money

The European Union urgently allocates the first tranche of macro-financial assistance to Chisinau. This is a bad sign for Moldova. Yesterday, Brussels officially deblocked financial assistance to Moldova. This was announced by the European Commissioner for Enlargement and European Neighbourhood Policy Johannes Hahn after a meeting with the Minister of Foreign Affairs of Moldova Nicolae Popescu. According to him, Chisinau will receive 14.5 million euros from the European Commission in the coming days. The European official also added that Moldova can expect the second tranche of assistance this autumn. Freezing of the EU’s macro-financial support was one of many shameful spots in the history of the past government. Brussels in 2017 prepared for Chisinau an impressive ‘money bag’ amounting 100 million euros, but decided to hold off after the scandalous invalidation of the election of the Chisinau mayor. After that, the ‘financial ban’ of the EU was repeatedly extended, and Moldova was presented with clear terms for its removal: reforms, fight against corruption, investigation of the theft of the billion. None of this was ever fulfilled under the Democrats’ government, so the promised 100 million remained in the EU accounts. With the coming to power of the ACUM-Socialists coalition Moldova’s stock in Europe have gone up dramatically. Visiting Chisinau after the anti-oligarchic coup, Johannes Hahn generously paid compliments to the winners of Plahotniuc and at the same time announced the imminent deblocking of macro-financial assistance, which, according to his statements, is to arrive this autumn. At the same time, Brussels, learned through hard experience, still made an important reservation through Hahn: the money will come only after the fulfillment of certain political and economic requirements – the same ones that were specified to the Democrats. Now it becomes obvious that the EU had to abandon the original program of action. Chisinau receives the first part of the planned assistance not in a few months, as mentioned, but literally now. At the same time, Moldova, of course, did not fulfill the EU conditions, and could not in such a short time. What made Brussels to suddenly change the plans? Apparently, the new government received Moldova not in the prime of its economy, but the predictions of experts, who feared that Plahotniuc’s populist projects to raise wages and build roads would have to be paid for by ordinary citizens, are coming true. The consequences of manual management of the economy from the office of the Democratic Party are particularly dangerous because the government of the Republic of Moldova now not only needs to find money for current expenses, but also to rebuild the entire system, which was based on not always legal schemes and direct instructions of the leadership ‘where and how to spend’. The country’s leadership now faces an extremely difficult task to maintain stability and to prevent at least someone in Moldova from nostalgia for the ‘feast’ of Plahotniuc time. It is especially difficult to do this when there is simply no money. Sandu government cannot afford to go into austerity for the same reason – it will instantly cause disappointment in society and undermine the trust in the ruling coalition. In addition, it can seriously stir up the atmosphere within the PSRM-ACUM alliance, in which the delicate balance of interests is already very difficult to maintain. Brussels is well aware of how everything can end: if you do not give Chisinau money right now, in the future Moldova will need even more IMF money, which, as known, is always given for the unpopular measures: raising tariffs, reducing government spending and other actions that hurt the wallets of ordinary people. As mentioned above, this is a direct path to the collapse of the ruling power: and later early elections, mutual criticism, crisis, another deadlock in negotiations with Tiraspol and the risk that the Dodon’s socialists or other opposition pro-European parties will win the future elections. It is obvious that 14.5 million euros is ‘first-aid’ for the troubled economy of Moldova, a shot of adrenaline that will not allow the patient to fall into another fit of the domestic political crisis. Probably, after the visit of Maia Sandu to Brussels, European officials saw the prospect of another aggravation in Moldova in full force, as well as real data on the financial situation in the country. It is unknown what exactly Maia Sandu told in Brussels about the Moldovan economy, since it was decided to save it – apparently, things are not as good as we would like. In the future, the EU will obviously continue to allocate multi-million tranches of macro-financial assistance to Moldova on the security of reforms stalled under Plahotniuc. The further financing of Chisinau is most likely to be directly related to the political achievements of the new government and success on the way to the EU. That in the foreseeable future makes the European course of Moldova inevitable in fact for the country – what, by the way, Maia Sandu insistently asks Igor Dodon to confess. However, are the political statements important, when the stability of the country is at stake?