The Fate of Moldova’s “Energy Independence” Project Without American Funds

Christian RUSSU

The hopes of authorities to compensate for the funds that have stopped since the closure of USAID are expectedly associated with the European Union, but probably in vain

The new US administration continues to openly mock the decisions of its predecessors regarding support for “democratic transformations” abroad. At the same time, our country is repeatedly mentioned in the list of the most useless and dubious expenditures of American taxpayers.  First, the Department of Government Efficiency (DOGE) headed by Elon Musk recommended cancelling a half-billion-dollar fund for a certain Consortium for Elections and Political Process Strengthening, including $22 million for Moldova. Two weeks later, DOGE blocked $32 million earmarked for Moldovan media. In both cases, this spending has been subject of scathing criticism from Donald Trump in public. Karma has played a cruel trick. After all, the PAS representatives throughout the years of their one-man rule liked to stigmatize their predecessors, using it as the main tool of political struggle. Now it must be very unpleasant for them to be a laughingstock. Maybe the hurt ego of the Moldovan leadership caused words of support from the EU ambassador Janis Mazeiks. After all, if European leaders massively expressed solidarity with Volodymyr Zelensky after the diplomatic fiasco in the Oval Office, why not stand up in defense of their second “best student”? And it would be desirable not only to do it morally, but also financially, pleasing a whole range of journalists and experts who were left without USAID support. It is clear that the EU will not be able to promptly cope with the money drought that has covered the entire NGO network deployed in our country. But competition and squabbles for European money has already begun, which threatens new scandals and image blows for the ruling party. However, the most obvious indicator of the ability of the authorities and the EU as the remaining partner to promote the onset of “good times” will be the energy sector issue. Less than a month ago, premier Dorin Recean announced tremendous plans to develop the country’s energy sector. Before that, Maia Sandu also self-contentedly spoke about them. In addition to the Vulcanesti-Chisinau power transmission line under construction, the list of projects that have entered the practical phase includes two more high-voltage lines in the direction of Romania: Balti-Suceava and Straseni-Gutinas, and even to Ukraine - Vulcanesti-Artsiz (to connect with the Novo-Odessa 330 KW substation). In short, a whole package of measures to exclude the MoldGRES from the current energy equation and to achieve political objectives. However, energy projects have been co-financed by Western donors. In particular, USAID (MESA programme, etc.), the European Bank for Reconstruction and Development, and EU grants, with the latter always accounting for a smaller share. And the main share came from EBRD loans and US aid. It is noteworthy that USAID started sponsoring this sphere at the end of March 2022, i.e. immediately after the start of hostilities in Ukraine. From the initial 17 million, it eventually reached a stunning $300 million. One of the components of this cooperation is arranging the electricity storage for system balancing in the north of the country. It was planned to install a 75 MW battery complex in Balti for 85 million dollars, together with 22 MW internal combustion engines. This was necessary not only to improve the connection with the Ukrainian system through the hydroelectric station in Novodnestrovsk, but also in view of laying a high-voltage line to Balti from Suceava, Romania. The project was derailed literally at the last moment: the tender for the purchase and installation of equipment was launched in mid-January. The Ministry of Energy expected to conclude the contract within a month and implement it by the end of the year, but it failed. The third high-voltage line across the Prut, Straseni-Gutinash, was also supposed to be built by the end of 2025. Without the U.S. funding, the project is frozen indefinitely, although it is already on the PAS list of “achievements” for the election campaign. Thanks to USAID, drones for external monitoring were purchased for Moldelectrica, and programmes for energy efficiency and transition to green energy were prepared. Maia Sandu can personally boast that last year she got more than $100,000 from the US agency for solar panels for the presidential building complex. Now the head of state and the prime minister are saying with a poker face that they are looking for money for all the energy projects that were supervised by the United States. It’s clear where they’re seeking it. But will the European Union be able to fully compensate for the dropped support? Let’s assume it won’t. The example of Ukraine’s president’s tough return to the US administration’s agreed framework should sober many of Trump’s critics, including Maia. At the same time, let’s not forget the strengthening of Moldova’s military capabilities, for which the EU has already earmarked €60 million. This coincides with the European Commission’s tremendous plans to rearm Europe. In other words, the priorities are quite clear, and it is clearly not energy development. There is an obvious solution for our authorities. The construction of the Vulcanesti-Chisinau power line should proceed at a rapid pace and, if the usual embezzlement does not happen again, it will be a crucial success for PAS members until the parliamentary elections. Everything is more complicated with the second line Suceava-Balti. This week the agreement with the EU on a grant to cover the missing 20% of the initial sum of 77 million euros surfaced. The agreement on the EBRD loan of 30.8 million euros was ratified by the parliament back in April last year, but there has been little progress so far. Another direct consequence of the plans to achieve so-called “energy independence” orphaned without USAID participation will be an inevitable increase in costs. With the deprivation of U.S. grant aid, all these projects will significantly increase the credit burden on our budget. In fact, according to the data for the end of 2024, payments on the external debt for the last four years have already increased five times (from 266 million to 1333 million lei). Yet, the main problem is not even this, but the fact that one of our main strategic partners has actually recognized the inexpediency of further investments in one of the components of Moldova’s anti-Russian policy, which for opportunistic reasons has been imposed and implemented by the PAS regime over the past years. It turns out that we persistently followed one direction, indicated by the Western allies, endured all the costs and convinced ourselves in the lack of options for the chosen course. And when we were almost there, it turned out that those very partners could change their minds, leaving us where we had wandered, with all problems accumulated along the way.