A Lifeline for Moldova

Sergiu CEBAN

At the Berlin summit, international funders decided to support Moldova, whose economy is about to collapse due to the conflict in Ukraine

The situation in Ukraine remains grave, and negotiations between Kyiv and Moscow seem to have become even further from concluding a mutually acceptable agreement or the military phase termination. In these circumstances, local observers are increasingly saying that the Ukrainian crisis is for a long time, and our country should focus on itself and solving an increasing number of problems. The WH’s statements do not add to optimism that, according to the estimates of the American administration, Moscow has changed the goals and plans for the invasion of Ukraine and is preparing for a new phase of the offensive, relocating its forces and concentrating offensive operations in the east and in some areas of the south of the country. According to the adviser to the US President Jake Sullivan, Russia plans to transfer tens of thousands of soldiers to these regions and in the near future will concentrate efforts on capturing additional territories. The authorities of our country and neighboring Romania have already announced that they are preparing for a new wave of refugees. Even though there are no concrete signs of penetration into the territory of the Odessa region, according to the Romanian Foreign Minister, Bucharest receives data about a possible attack by Russian troops on Odessa. The protracted uncertainty will keep affecting Moldova, causing a severe crisis in our economy. Even one month of military operations was enough to realize how vulnerable the republic is in the face of such challenges and how dependent our economy is on eastern markets. Still, such a difficult test for the current government provides opportunities to radically reconfigure individual sectors of the economy and ensure more stability. Yesterday, at the suggestion of the German Foreign Ministry and with the support of Romanian and French colleagues, an unprecedented conference Moldova Support Platform was held in Berlin, which was attended by representatives of 9 international organizations and 36 states. These are the countries that have expressed their willingness to provide Moldova with urgent financial and humanitarian assistance both to receive Ukrainian refugees and to keep the financial and economic situation in the country from collapse. According to Annalena Baerbock, the event was designed to build a “bridge of solidarity” between Moldova and Western countries. The initiative turned up just at the right moment, because the situation in our country is, to put it mildly, unenviable. The cost of energy resources has increased by 360%, and the inflation rate has already reached 18%, and the National Bank gives an even more negative forecast for the fourth quarter of this year. Only according to official data, the cumulative negative effect of the current regional crisis has led to an increase in the poverty rate to 30%. Despite the major financial support that partner countries and various international financial institutions have promised us, according to financiers, the entire volume of agreed assistance does not cover Moldova’s budget deficit this year and next. An additional negative factor is the problem of the non-permissibility of increasing the national debt, which is already getting close to the limits of safe borrowing. Therefore, the only real way to save the Moldovan economy from collapse is a significant increase in the grant injection of money into the Moldovan budget. As a result, it was agreed at the forum in Berlin that our country would receive about 700 million euros of support in the form of loans, grants and other forms of assistance. The accumulation of such a volume by the international community is a very good sign, which will help at least reduce the severity of problems and deal with the current humanitarian and energy challenges. Strangely enough, this crisis may even create additional incentives for speedy implementation of the reform program and, accordingly, the process of European integration, but the experience of previous periods so far excludes extra optimism here. In this sense, it was quite reasonable to use the Berlin conference to remind that Moldova has applied to join the European Union. “We want to be part of the free world, this is a natural step for us, we want to be a member of the European Union, because we believe in progressive development based on democracy and legal statehood,” Natalia Gavrilita said. The government, of course, will still have to sort everything out and understand what specific resources and on what conditions will be allocated to our country. However, we cannot detract from the fact that the event in the German capital has a serious political charge. Unfortunately, the Ukrainian events almost completely absorb all the diplomatic and political resources of Europe. The Berlin Forum gave an opportunity to at least slightly push Moldova to the forefront of the pan-European attention, and our authorities to remind Brussels of themselves and promote our country on the common agenda of the European Union. It is also good for synergy that the next meeting of the Parliamentary Committee on the Moldova-EU Association starts today. Among the main topics are regional and energy security, macro-financial assistance from the EU, as well as the implementation of Moldova’s Economic Recovery Plan from the consequences of the pandemic. Moldova, even with the current, apparently not maximum, level of intensity and remoteness of hostilities from its borders, was almost on the verge of a complete default, when by the middle of the year the state could have real problems with the inability to fulfill social obligations to the population. It is difficult to imagine how a Socialist government or another political force that does not have broad support from the West would escape this situation. However, it’s not worth deluding yourself too much yet. It will be of great importance to control the spending of the funds provided in order to prevent the first half of the 2010s from repeating, when financial injections into reforms practically did not have a positive effect, which ruined the image of the republic in the European Union. Much, of course, will depend on the competence of the government, whose successes are still quite limited. It is absolutely necessary to use the current turn of history with the maximum benefit for the country, since there is a complete feeling that there will not be a second such chance.