Expert: Moldova Risks Repeating Romania’s Crisis

Following in the footsteps of Bucharest’s ill-fated experience, PAS continues to shower the electorate with pre-election handouts from the state budget – a policy that may lead to the need to introduce austerity measures as early as this fall

Prime Minister Dorin Recean announced Tuesday a reduction in electricity tariffs for households by about half a lei on average (depending on the provider), or 12-15%. This discount, which appears to be purely electoral in nature, will likely be short-lived and funded by previously accumulated revenues from Energom’s unjustifiably high tariffs. As a kind of compensation, the government plans to grant Energom a monopoly over natural gas transportation. The authorities will not “burden” the company, which, due to its political importance in securing a fictional “energy independence”, must retain maximum financial flexibility. Thus, right after the elections, assuming the current regime remains in power, the tariffs will likely be adjusted back upward. With its public support slipping, the ruling party is desperately searching for ways to attract voters, especially among the undecided, whose share remains unusually high this election season. One-time payments and subsidies, tariff cuts (likely not the last in the coming weeks), and taxpayer-funded political advertising are all indicative of a lack of ideas and a superficial understanding of public needs and sentiments. Moreover, such primitive campaigning could backfire soon, as the troubling experience of neighboring Romania clearly illustrates. In Romania, the establishment, aided by various political maneuvers and active foreign interference, succeeded in blocking the rise of forces with alternative agendas (the so-called “sovereignists” like Calin Georgescu and George Simion). This required a prolonged period of unjustified public spending aimed at generating PR effects. The result was a massive budget deficit and accusations from Brussels of breaching fiscal discipline, threatening Romania’s access to EU funds. Today, Romania has imposed a strict austerity regime: cuts are being made to regional budgets, government operations, and crucial programs in healthcare and education. This has sparked not only opposition and union criticism, but also civil disobedience (even within the central apparatus of key ministries). Bucharest risks sliding from a financial crisis into an economic and political one. Combined with Brussels’ tough stance, NATO-related defense spending obligations, and growing security concerns, this could seriously undermine the country’s stability. It’s not unlikely that Romania’s capacity to fund Moldova-related initiatives will shrink in the coming years. Key projects are already affected: for instance, the construction of the A8 motorway segment connecting Iasi and Ungheni has been postponed. The PAS-led Moldova is following the same path. The government is purchasing energy resources from Western-approved suppliers at exorbitant prices and in volumes unprecedented in modern Moldovan history (supplies from MGRES are not counted as imports). There is a climate and management disaster in agriculture, strikes by transport companies, reduced access to export markets (e.g., Russia, the US), and a stagnant real estate market – all posing serious challenges to Chisinau. Yet instead of taking pragmatic management steps, drafting development budgets, or attracting investments, the government, absorbed by the election race, is carelessly wasting the remaining state funds and donor aid. Unsurprisingly, the GDP growth forecast has been downgraded from 1.6% to 1.3%. Considering last year’s meager 0.1% growth, signs of stagnation are evident. Some experts are even voicing fears of potential national bankruptcy within five years. Meanwhile, U.S. financial aid has been declining for some time. Chisinau had expected the EU to cover PAS’ relatively modest fiscal needs. But even that may become uncertain. EU countries and the European Commission have pledged to significantly increase military spending in the coming years, including contributions to NATO (Moldova is doing something similar, raising its national defense budget to 1% of GDP). The trade bargain between Donald Trump and Ursula von der Leyen, involving a massive tariff disparity, $750 billion in purchases of US energy, and $600 billion in US-bound investments, will deal a severe blow to the EU’s solvency. Brussels is already cutting agricultural spending by over €150 billion, and this is only the beginning. Loss of access to cheap energy, deindustrialization, militarization, migration risks, etc., could push most EU countries into economic crisis, very likely leading to reduced support for peripheral nations like Moldova. It is already clear that after the parliamentary elections, Moldova will face budget cuts, including the “optimization” of social spending. Based on the regime’s current actions, it appears this prospect doesn’t concern PAS leadership – they’ll continue collecting salaries and “bonuses for European integration”. Any public dissatisfaction can be suppressed by repressive measures, with Brussels’ blessing, if PAS stays in power. To conclude, Moldova is entering a phase of financial and economic turbulence, growing deficits, and mounting debt, which threatens harsh austerity at the public’s expense and a looming political crisis. The only question is how the electorate will react. In Romania, voters ultimately supported traditional parties and “were rewarded” with a steep decline in living standards. Moldova may seem to have hit rock bottom already, but an extended PAS mandate risks exposing new depths of managerial chaos amid widespread impoverishment.