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Moldova Hits The Gas

Moldova's Vlad Filat (left) meets with Vladimir Putin.
Moldova's Vlad Filat (left) meets with Vladimir Putin.
When Moldova's acting president, liberal Mihai Ghimpu, was recently asked by a reporter, "Who is going to pay Gazprom for the natural gas consumed by the Transdniester separatist region?" Ghimpu took a big pause before answering.

Lost in thought, he gazed at the cameras for about a minute. Then he turned to the reporter who asked the question. "Unimedia shall pay!" the acting president said. Everybody burst out laughing, but Ghimpu's laugh wasn't so convincing.

Two weeks later, the Gazprom-owned MoldovaGaz gas distribution company announced that its owner had asked for debt repayments of $288 million.

The May 18 announcement sparked a lively and emotional public debate among politicians, experts, journalists, and, of course, gas consumers. "What debt? Whose debt? How much? Oh, really? We told you, don't mess with Russia!" they said on talk shows, press conferences, parliament meetings, and in kitchens.

At some point in the debate, a local analyst made a revealing "the emperor has no clothes" observation. The whole thing is fake, he said. Gazprom owns 62 percent of MoldovaGaz and the debt is mostly Transdniestrian. Let the separatists deal with it as they wish. The Russians are providing them with free gas, but they keep sending bills to us.

The "mostly Transdniestrian debt" could be the key phrase.

Moldova's "historical" debt for Russian gas, which accumulated during the 1990s and early 2000s, amounts to a staggering figure by local standards -- more than $2.3 billion. It's twice the entire Moldovan state budget for this year. But only around 15 percent of the debt is for gas consumption on the right bank of the Dniester River. The rest is for unpaid consumption from the Transdniestrian separatist region, which is outside the Moldovan government's control.

Almost every year for the last several years Gazprom sues MoldovaGaz for unpaid debts and wins case after case in the International Commercial Arbitration Court in Moscow. But no real action has been taken to actually carry out the court's rulings and get the money back from Transdniester. The court is expected to rule on Gazprom's last demand for debt repayment by the end of June.

Although Moldova's share is small, the authorities in Chisinau seem to be unusually worried by Gazprom's actions to get paid back the "mostly Transdniestrian" debt. "Russia does it on purpose this time so that we lose the coming early elections and the Communists win again," a politician from the ruling liberal-democrat and pro-Western coalition complained.

As prices for Russian gas delivered to Moldova increase every three months and are expected to reach European levels by January 2011, a request for a quick debt repayment could bring more pain to Moldova's shaky economy and drive voters away from the pro-Western coalition ahead of early elections expected by the beginning of next year.

The prime minister, Vlad Filat, brought up the issue on May 22 during a bilateral meeting with his Russian counterpart, Vladimir Putin. Filat said his government wanted a clear separation of the Transdniestrian debt from the total Moldovan debt "so that it can be better administrated."

No previous Moldovan government has asked for a legal separation of the debt out of fear that it could be interpreted as recognition of Transdniester's independence. After all, a country isn't a country if it doesn't have its own debts.

Filat hopes to reach an agreement with Gazprom on debt separation sometime during the summer, though Putin made no promises. Instead, the Russian prime minister lamented the "milky" political situation in Moldova.

In an interview aired on Russian TV the day after his meeting with Filat, Putin compared it to the situation in Kyrgyzstan, the Central Asian country now run by an interim government. He said that Russia would help Moldova to stabilize first. It will help in "various ways," as he put it. But this begs the question: why not help Moldova in the way it asks?

-- Alexandru Eftode

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