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Moldova

Yearbook 2008

Moldova. In March, after seven years as prime minister, Vasile Tarlev was replaced by former Finance Minister Zinaida Grecianii, who thus became M's first female head of government. According to Countryaah reports, Grecianii emphasized the importance of freedom of the press, active dialogue with citizens and the independence of the judiciary.

2008 Moldova

In April, Moldovas president and leader of the Transnistrian breakaway republic met for the first time in seven years. The meeting was held in Bender, Transnistria, where Vladimir Voronin and Igor Smirnov agreed to resume the peace talks that broke down in 2001. No date was set for the talks, but President Voronin had previously declared his desire to resolve the conflict before his second and final term 2009. Russia has military in Transnistria. In connection with Kosovo's independence at the beginning of the year, hopes were raised in Transnistria that Russia would recognize the breakaway republic as independent.

Moldova is regarded as Europe's poorest country with poor public health, including widespread tuberculosis. About 4.5 million people have left Moldova to apply for work abroad, and the money they send home accounts for more than a third of Moldova's GDP. More than half of emigrants are women and many have fallen victim to human trafficking.

Heavy rainfall and flooding during the summer caused the death of at least three people in Moldova's capital Chişinău, where thousands of residents must be evacuated.

Following Russia's war against Georgia over the Georgian outbreak republics of South Ossetia and Abkhazia, President Voronin and Russian President Dmitry Medvedev met, who said they had good hope of resolving the conflict around Transnistria. At the same time, the Russian Duma voted for Russia to recognize South Ossetia and Abkhazia as independent states, which also happened. Transnistria, which is also not recognized internationally, followed in the footsteps of Moscow and recognized South Ossetia and Abkhazia.

Transnistria Economy

Transnistria's economy is based on exports of industrial goods, repatriated money from emigrated citizens and Russian grants. The economic system is a mixture of Soviet command economy and a relatively free market economy. There is also considered to be a significant element of smuggling, but the views fall apart as to how large that proportion is and whether it is justified to describe the country as a mafia state.

Industrial production is dominated by steel, electricity and textiles. The domestic market is small and the companies are heavily dependent on being able to export.

The largest individual company group is Sheriff, which is the country's largest employer and owns, among other things, chain stores, gas stations and a mobile operator. The Group is estimated to account for half of all construction operations in Transnistria and 90 per cent of oil and gasoline sales. The sheriff is also the only major company in the country that is basically run according to the rules of a free market. It receives no state support but was exempted until 2012 from certain customs duties. During Igor Smirnov's regime from 1990–2011 (see History), the Sheriff had a privileged special position that gave the Group the right to freely manage foreign currency, which could, for example, be transferred to low-tax countries. These privileges were abolished by the new President Yevgeny Shevchuk.

The Transnistrian economy is still strongly intertwined with the official Moldovan economy, which means that all Transnistrian export goods are labeled as manufactured in Moldova. Transnistrian companies wishing to export their goods legally must register with a court in Chișinău, Moldova's capital.

Since Transnistria is not an internationally recognized state, economic activity in the country is in principle considered illegal. A number of state companies have been privatized without Moldovan approval. Nor has it been established how much of the Moldovan government debt that Transnistria should rightly take on.

The Transnistrian gas company TiraspolTransGaz-Pridnestrovje receives its gas from the Moldovan MoldovaGaz, which in turn buys it from Russian Gazprom. The transnistrian company sells the gas to customers in the breakaway republic for good profits but pays nothing to the Moldavian supplier. MoldovaGaz cannot stop that business because Gazprom is its principal owner. Transnistria is estimated to have a formal debt to Gazprom of at least SEK 25 billion. Russia, which believes that Moldova is responsible for the debt, can use it to exert political pressure on the government of Chișinău, which seeks membership in the EU. The Russian president's special envoy to Transnistria has said that Moldova must repay the gas debt if the country were to be reunited.

Transnistria has a large and constant budget deficit, which is covered by Russian financial support to around 70 percent. The country's isolation means that the prospects for sustainable economic development are considered rather small.

Transnistria has its own central bank and its own currency, the Transnistrian ruble. It can be freely exchanged within the state of the breaker at market rates but cannot be used anywhere else.

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