Opinion: Moldova Has Retained Its Energy Dependence on Russia with Its Head Held High

Sergiu Ceban

Despite the bold declarations, the new authorities still did not dare to break the energy reality in which Moldova has lived for the last decades

Last Friday, the regular negotiations of the Moldovan delegation with Gazprom PJSC somewhat unexpectedly yielded results. So, an agreement was signed, which sets out the general agenda for gas (in other words, the existing problems and ways to solve them), as well as a contract for its supply to our country from November 1 for the next five years. According to Deputy Prime Minister Andrei Spinu, the parties approved the pricing formula proposed by the Moldovan delegation, but it can be made public only by mutual consent. As reported by the official, in November the price is going to be about $ 450 per thousand cubic meters of gas, and its further reduction will depend on the cost of natural gas on international exchanges. Also, apparently, in order to avoid speculation, Spinu noticed that the document signed with the Russian side does not contain any political conditions regarding the left bank of the Dniester. As for the historical debt of Moldovagaz JSC (right bank), it was agreed to conduct an independent audit of the amount in 2022 and, based on the results, start negotiations to agree on a payment schedule. At the same time, there is no information about how and when Chisinau and Moscow plan to solve the problem of Pridnestrovian debt for supplied energy resources. The “secret” protocol on the settlement of gas issues, of course, cannot provide answers to most of the questions that have arisen not only among experts and opposition politicians, but among ordinary citizens as well. In particular, it is still unclear what the price will exactly be (there are different figures in the Russian press – 500-600 dollars) and under what formula it is going to be calculated. In general, we must admit that our authorities have chosen a rather strange and completely confidential approach in this whole gas situation. The most difficult outcome of the negotiations for the republic’s population is the future gas tariff, since the current invoices clearly do not reflect the real price of blue fuel. Thus, a dramatic increase in the cost of utilities is inevitable. The government will certainly try to convince citizens of the “incredible success” in the form of the five-year energy stability, and, most likely, will fund the support of socially vulnerable segments of the population. Still, there is no doubt that the expected multiple increase in tariffs will add no sympathy to Natalia Gavrilita’s Cabinet of Ministers. Many concerned citizens and journalists really want to understand what exactly “helped” the Russian side to make such a difficult compromise, having almost all the cards, against which one-day purchases of gas from alternative sources by Energocom looked, to put it mildly, unconvincing and only gave rise to ironic ridicule. It would also be useful to know whether the Moldovan delegation has undertaken any additional obligations to purchase permanent volumes of natural gas exclusively from Gazprom, even without the possibility of storing them in gas storage facilities. In this sense, the fate of the “Third Energy Package” is of particular concern, which was supposed to become one of the main tools to restore order in the country's energy sector and bring us closer to the common market of the European Union. It is known that the introduction of these pan-European rules in Moldova is of the most serious concern to Moscow, since it significantly narrows the possibilities of the Kremlin's political influence in the region. If our authorities still decided to make concessions to the Russian side and put the “Third Energy Package” on pause, then this could have a very serious impact on EU funding, as well as on the prospects for large-scale investments in Moldova’s energy sector in order to reduce energy dependence on Russia. Moreover, the refusal to liberalize the market may, in fact, deprive the Iasi-Ungheni-Chisinau gas pipeline of chances to be involved in the coming years and reduce the level of Brussels’ confidence in Moldova. All in all, we might say that the country’s leadership eventually chose to retain the situation that existed for many years in the domestic energy market, with its problems, non-transparency and corporate-financial interests. That is, gas raw materials will be supplied, as before, to the left bank for the production of electricity which Moldova has presumably committed to purchase without extending the Third Energy Package requirements to, inter alia, the electricity sector. A certain annoyance with the entire situation emanates even from the pro-government experts and analysts, especially considering the fact that just a day before the important news President Maia Sandu called on everyone to understand what it takes to fight for energy independence from the Kremlin. Moreover, in recent weeks, the media used to constantly broadcast the expert opinion about the need to shake off Russia’s “gas yoke” for the sake of preserving the national dignity, as well as encouraging messages from the EU. Last week even saw a sixty-million grant allocated to Moldova by Brussels. That is, everything suggested that the confrontation between Chisinau and Moscow would be principled and long. And then, literally the next day, the deputy prime minister informs us about reaching an agreement with the Russian gas monopolist, the terms of which are commercial and confidential, and the key “outcome”, as Spinu told, is “only” a three-fold increase in prices for Moldovan consumers. For Moscow, the negotiations can definitely be called a triumph, since it not only protected its energy interests, but also, most likely, managed to win certain political concessions from Chisinau. Even Maia Sandu herself admitted she had to get in touch with Dmitry Kozak several times to achieve a softening of the Kremlin’s position. The coming months will show what Moscow has exactly gained. All that is left is to observe the decisions to be taken by the head of state and the government whose political rhetoric has greatly devalued in just a few days. Obviously, it was necessary to recover from the situation, into which the Moldovan authorities had forced themselves, with their heads held high - this is what can explain the heartfelt tirade from the president the night before the talks were “successfully” completed. There is a feeling that the calls to be ready to tighten the belts, the three-day talks between Spinu and Miller, as well as test purchases of gas from alternative suppliers – all this was only a sham to simulate a “serious confrontation” of the new Moldovan government with the Kremlin for the sake of “protecting the national strategic interests.” In fact, the negotiations on a new gas contract have become a serious foreign policy test for Maia Sandu and the Action and Solidarity party, allowing us to see the extent to which the new authorities are ready to break the energy reality in which Moldova has lived for the past decades, as well as whether they have the strength and desire to go head-on with Moscow’s interests. The answer, I would say, is now clear. The ruling party failed to play a long game, and their enthusiasm to “butt heads” with Moscow was finally killed by more than frank statements from the EU that they were not going to compensate for the losses to Chisinau on gas purchases from alternative sources. Well, if the country’s leadership takes a similar approach to other processes and combinations, we are unlikely to witness drastic domestic changes.