Thursday, July 31, 2014


Moldova

Moldova: An Insider Looks At The Pasat Case

<!--StartAuthor-->By E. Wayne Merry<br><!--EndAuthor--><div class="caption"><div class="watermark"> <a href="http://gdb.rferl.org/F130A654-E912-4FC1-8E47-EB7E98C9BCF6_mw800_mh600.jpg" rel="ibox" title="Pasat on trial in Chisinau on 27 June"> <img alt="Pasat on trial in Chisinau on 27 June" src="http://gdb.rferl.org/F130A654-E912-4FC1-8E47-EB7E98C9BCF6_w203.jpg" class="photo" border="0"></a></div><p>Pasat on trial in Chisinau on 27 June</p></div><graphic/>On 27 June, the trial of former Moldovan Defense Minister Valeriu Pasat in connection with the sale by his government in 1997 of 21 MiG-29 jet fighters to the United States got under way. The ostensible offense for which Pasat, who served as defense minister from 1997-99, is in the dock is that he defrauded the Moldovan state of $54 million by selling the planes to Washington for a mere $40 million.

The arrest and trial are widely viewed as politically motivated, due to Pasat's association with a previous Moldovan administration and his current connection with Russia's Unified Energy Systems (EES), for which he works as a consultant. The image of a political trial is reinforced by the fact it is being held behind closed doors at the request of the prosecution, purportedly for national security reasons.

Whatever else Pasat may have on to account for, the MiG sale was a good financial deal for Moldova. I oversaw the purchase as Regional Director for Russia, Ukraine, and Eurasia in the office of the U.S. Defense Secretary. I conducted the initial negotiations with Pasat, although I left the Pentagon for a Congressional staff assignment a few weeks before the final purchase.

This acquisition involved confidential matters that I am not at liberty to discuss, but the intention of the U.S. government was to remove the planes from any potential illicit sales on the international arms market and to assist Moldova during a period of extreme economic hardship. The Pentagon saw the transaction as, in part, a type of assistance to Moldova. The amount the United States was willing to pay for the aircraft and associated equipment seemed generous to U.S. officials involved.

The Moldovan side, including Pasat, did not understand the concept of "fair market value," to put it mildly. Officials in Chisinau felt the planes must be worth at least what they had cost the Soviet Union to build, rather than what anyone with real money was currently willing to pay for them. They wanted much more that $40 million, and it took months for them to recognize the limitations of the market.

The aircraft in question had been left in Moldova by the Soviet collapse. Although local mechanics kept the planes in good repair, they were of no practical use to the Moldovan state, which could not even afford fuel for training. The planes had no viable military purpose, as Moldova barely has enough airspace for high-performance fighters to turn around in the sky.

There were no other legitimate buyers for the aircraft, my research at the time revealed. Several other governments operated MiG-29's, but none wanted to add to their inventories; indeed, most were shifting to NATO-standard aircraft. The Moldovan planes lacked a source of spare parts and support/repair systems, making them of little value for a new customer. Russia, the producer of the MiG-29, made clear to potential customers that it would supply parts only for planes purchased from it or with its concurrence. Russia would not encourage the competitive sale of MiG's from sources like Moldova, which might cut into its own export market.

The only other potential customers for the Moldovan planes were the so-called "rogue states." Washington felt it had legitimate concerns about the leakage of Soviet-made weaponry of all types from the arsenals of post-Soviet and former Warsaw Pact states to rogue governments. For Moldova, such an option would have been a disaster because the United States would have terminated its bilateral assistance programs if the MiG's fell into rogue-state hands as required by U.S. law. I have no doubt Washington would also have used its influence in international financial institutions to punish Moldova severely as an object lesson to other countries to discourage this kind of commerce.

The Moldovan government in 1997 was informed of these realities and came, although slowly, to understand the United States was its only serious potential customer, that the offer was a fair one, and that the United States would pay real money immediately in contrast to the vague promises so common in the global arms trade. After several months of negotiations and high-level interventions from the U.S. side, the deal was done. It was a good deal for Moldova.

The sale was a disappointment to many in Chisinau who imagined the aging aircraft to be a goldmine of astronomical worth. In fact, $40 million was more than many people in Washington wanted to pay. I remember having a hard time finding so much money for a country of less-than-primary importance to the United States. The Pentagon proceeded as part of its policy to develop cooperative defense relationships with all the former Warsaw Pact and Soviet states.

I do not know how the $40 million was used. The payment was a simple inter-state financial transfer with no cash or funny business involved. The money went to the Moldovan Finance Ministry.

Anyone with experience of Moldova knows how far short it falls in comparison to Western standards of business practices. Corruption and malfeasance have been rife there throughout its years of independence. However, the sale of 21 aircraft for $40 million was an entirely legitimate transaction. The thinly veiled accusation behind the Pasat trial that the United States in some way defrauded or swindled Moldova in this matter is false.

E. Wayne Merry is a former U.S. State Department and Pentagon official and now Senior Associate at the American Foreign Policy Council in Washington.

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