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Moldova: Analysts Doubt Reforms Following Communist Election Victory

Western analysts are anxiously watching Moldova in the wake of this week's elections which left the Communist Party with a parliamentary majority and the future of economic reforms in doubt. As RFE/RL's Ron Synovitz reports, the policies of the incoming government ultimately will determine whether the impoverished country receives more than $100 million in loans pledged by the International Monetary Fund.

Prague, 27 February 2001 (RFE/RL) -- This week's election of a Communist Party majority to Moldova's parliament has raised concerns among western analysts about the future of market reforms there. During the past decade, the Communists have repeatedly blocked or stalled key reform legislation in the parliament. Notably, the party voted as a bloc last year against the privatization laws which are at the center of a recent $142 million loan agreement with the International Monetary Fund. The IMF has disbursed $24 million since that loan deal was reached in December.

The head of the IMF's mission in Moldova, Richard Haas, told President Petru Lucinschi last month that an election victory for the Communists would not, in itself, cause the IMF to withdraw its support for Moldova.

But Haas told RFE/RL just before the elections that the government which will be formed in Chisinau during the coming weeks must push forward with market reforms and honor its commitments under the December deal. He said that if the new cabinet does not agree with the reform path, the IMF will stop its assistance to Moldova.

A new IMF mission is due to arrive in Chisinau in late April to assess the performance of Moldova during the first three months of this year. That mission will focus on the level of hard currency reserves in the Central Bank, as well as on the government's success in meeting its obligations to keep down internal debt, pay salary and pension arrears, and stick to a timetable for key privatizations.

Stuart Hensel, a specialist on Moldova for the London-based Economist Intelligence Unit, told RFE/RL that he doesn't expect the Communist-dominated parliament to reverse legislative reforms made last year by outgoing Prime Minister Dumitru Braghis' centrist government. But Hensel says the Communists may slow the privatization process -- a move that would threaten the IMF program.

"Our real concern is that they are going to misjudge the extent of leeway that they have with the IMF. They may think they can play at the margins of the IMF program, and impose certain policies -- hoping that the IMF won't mind. I think that's where the Communists will misjudge and will misstep. And you will see even more risk of significant time lapses between IMF disbursements. It's something the Communists will have to learn: to figure out how much room they have to maneuver with the IMF."

Hensel also notes that the election campaign platform for the Communist Party included several economic policies that would be viewed unfavorably by the IMF.

"Their pre-election manifesto was fairly hardcore in some areas like reimposing price controls -- obviously things that, the minute they try to do it, would mark the end of Moldova's IMF program. The key question now, as with any election, is to what extent Communists carry through with their pre-election manifesto."

Communist Party leader Vladimir Voronin yesterday signaled that his party plans to pursue some of the radical changes proposed in its manifesto.

"The participation of the voters, their votes, will make a radical change of the situation possible. A change in the sense that all the reforms will (from now on) have a beginning and an end. They will be conducted to the end, which means all the shortcomings that took place as a result of the last 10 years of democratic changes will be stopped and a necessary and right path will be taken in the development of the republic."

Voronin also suggested yesterday that Prime Minister Braghis would be asked to remain in that post with a cabinet of technocrats. Such an arrangement would still leave the Communists in parliament with the power to approve all the other ministerial posts, as well as to create the domestic and foreign policies that Braghis would have to implement.

Braghis, who leads a bloc of centrist parties, almost immediately rejected the suggestion to stay on as prime minister. He told reporters that the Communists will have to accept complete responsibility for the situation that emerges in Moldova as a result of their policies.

Indeed, Moldova's centrist-right politicians have been so frustrated by the reform delays caused in recent years by Communists in a deadlocked parliament that some have openly expressed hope for a Communist majority. In that way, they say, voters will see that it is the delays caused by Communist opposition to reform -- rather than the reforms themselves -- that have caused Moldova's extreme poverty.

Meanwhile, the IMF's Haas told RFE/RL that the fund is concerned about a lack of foreign investors in Moldova because of what he called "an inhospitable business environment."

The IMF, the World Bank, and the EU have all expressed concerns about corrupt links between Moldova's lawmakers and vested business interests. A World Bank study last year determined that such vested interests are a main cause for the slow pace of reform.

The non-governmental organization Transparency International last year ranked Moldova the 16th most corrupt country of 90 countries surveyed. That study was based on polls among businessmen, analysts, and Moldovan citizens from 1998 to 2000.

The World Bank found that more than 40 percent of Moldova's business community felt that vested interests had control over the parliament, party financing, and the Central Bank.