Author: Iulian Groza, Executive Director of the Institute for European Policies and Reforms (IPRE)
Six years ago, in an interview, I said that signature of the Association Agreement irreversibly anchors us in a process of European integration, through political association and economic integration with the European Union. And by implementing the Agreement, the Republic of Moldova is no longer alone in the face of internal and external challenges. Will become more modern and more developed, sharing common values with the European Union, such as democracy and the rule of law, respect for human rights, good governance, market economy and sustainable development. Moreover, we begun to set new ambitious targets to move forward on the European path.
Today, after a look back, we realize that only some of the goals and expectations of that time have been met. We failed to make full progress in implementing the value part of the Association Agreement. Democratic institutions are fragile and continue to be mutilated by narrow political and economic interests. Political elites continue to polarize society and divert attention from real problems of the country. The information, security and internal political areas continue to be vulnerable to internal and external misinformation. The rule of law remains weak.
One step forward, one step back, another step on the side …
Selective and inefficient justice, exposed to political interference remains the biggest challenge of the Republic of Moldova, which hinders the sustainable development of the country. Even if the ruling parties recognise this problem and regularly declare their support for justice sector reform and anti-corruption actions, in reality, they admit and promote policies and actions that practically contradict these statements. Here we can recall the attacks and attempts to influence and even intimidate the judges of the Constitutional Court by the MPs of PSRM and the President of the Republic of Moldova. Most recently, the attempt of the parliamentary majority to block the appointment of Viorica Puica as a judge at the Supreme Court of Justice, nominated by the Superior Council of Magistracy as a result of a contest. This is happening while Viorica Puică is a judge who enjoys an impeccable reputation in the judiciary and is known as a person with unquestionable integrity and professionalism.
Such drawbacks discredit the Government’s and the Ministry of Justice’s efforts to promote necessary policies to transform the justice system with the support of European experts and civil society, such as the reform of the Superior Council of Magistracy or the drafting of a new Strategy for Independence and Integrity of the justice sector.
However, despite these challenges, which will continue to be a preoccupation of the country’s pro-reform actors and development partners, the ties with the European Union are stronger today.
The EU is the most important economic partner of the Republic of Moldova, almost 70% of Moldovan exports being oriented towards the European market. Over 70% of citizens of the Republic of Moldova have travelled freely at least 3 times in the EU and other European countries. More than 45% of the EU’s acquis has been transposed into the normative framework of the Republic of Moldova.
The image of the European Union among the citizens of the Republic of Moldova has improved in recent years. According to a recent survey conducted in Moldova and other Eastern Partnership countries, more than 63% of Moldovan citizens say they trust the EU.
This is largely due to the fact that the European Union has revised its approach in relation to the Republic of Moldova, diversifying and decentralizing financial assistance to several actors of change, especially local authorities, small and medium-sized enterprises, independent media, civil society and local communities. The most recent example is the new programme EU for Rural Moldova, aiming at developing entrepreneurship by supporting small and medium-sized businesses and creating jobs in rural areas of the country. To date, more than 15,000 small and medium-sized enterprises benefited from EU funding. More than 700 km of roads have been or will be rehabilitated thanks to EU support. The Republic of Moldova is gradually connecting its energy infrastructure with that of the European Union.
Moreover, the European Union has become much more critical of the lack of progress in systemic reforms, clearly and unequivocally disapproving the internal drawbacks and strictly conditioning its assistance. The EU has also increased pressure on the Moldovan authorities to comply with and implement the commitments set out in the Association Agreement.
Since 2009, the EU, together with its Member States, the European Investment Bank (EIB) and the European Bank for Reconstruction and Development, offered Moldova over EUR 1.9 billion, more than half of which were grants.
During the pandemic crisis, the EU managed to come up with a timely response for the Republic of Moldova, redirecting over EUR 82 million to support anti-Covid-19 initiatives and providing EUR 30 million to healthcare system. Another EUR 100 million has been allocated as macro-financial assistance to support anti-crisis measures. This is despite a highly complicated political dialogue and against the background of disqualifying messages from the country’s leadership towards the EU and its ambassadors in the Republic of Moldova.
Under these circumstances, what facilitated the maintenance of a pragmatic dialogue with the EU were largely the diplomatic efforts of the Ministry of Foreign Affairs and European Integration and the focus of the EU institutions on supporting the citizens of Moldova and providing the necessary support to Moldova in overcoming multiple crises. Basically, while bringing forward the interest and benefits of the citizens, the EU showed its solidarity and did not give up its agenda of providing consistent support to the Republic of Moldova.
Thus, the first tranche of EUR 50 million of OMNIBUS macro-financial assistance is to be allocated immediately after the ratification of the Memorandum of understanding and Loan Agreement signed last week by Moldovan authorities. The remaining EUR 50 million will be transferred in the beginning of next year, once the six negotiated technical conditions are met.
Although these conditions have not yet been made public, we already know that they are largely aimed at (1) public finance management, in particular ensuring a transparent and efficient public procurement process in the health system, (2) the reform of the Supreme Council of Magistracy, ( 3) increasing the efficiency of the National Integrity Authority in particular referring to the declaration of assets and conflicts of interest, (4) reviewing the strategy for recovering criminal assets as a result of the bank fraud, (5) improving the business climate by adopting the new Customs Code and ( 6) improving measures to counter smuggling cigarettes and alcohol, including by harsher sanctions.
In addition, once the conditions set out in the 2017 Memorandum of Understanding and the 8 general requirements agreed with the Government of Chisinau at the beginning of this year were met, the EU approved the second tranche of EUR 30 million in macro-financial assistance. The first EUR 20 million loan has already been allocated, while the remaining EUR 10 million are to be transferred shortly. However, given the expiration of the 2017 Memorandum of Understanding and the non-fulfilment of all agreed conditions, Moldova missed the third tranche of EUR 40 million.
However, the Moldovan authorities would still have a chance to regain the lost ground by negotiating a new EU macro-financial assistance programme of at least EUR 100 million to support structural reforms. This will be possible once the government succeeds in launching a new programme with the International Monetary Fund. However, for them to succeed, it is absolutely necessary that the Moldovan authorities demonstrate a real political will and consistency at national level in carrying out the necessary reforms, including speeding-up of the implementation of the Association Agreement.
Resetting the European agenda through a stricter, but smarter EU conditionality
The European Union must continue the strict conditionality for its financial assistance that could be smarter, more targeted and tailored. Its stake would be to boost the long-term reform agenda, for the benefit of the citizens of the Republic of Moldova.
On one hand, strict EU conditionality works much better and can have a short-term impact in countries with pro-reform governments that are open and committed to implementing the reform agenda. In this case, once the commitments are met, the conditionality can also come with a reward based on the principle applied in the Eastern Partnership countries – “more for more”.
On the other hand, EU support is declining proportionately in countries ruled by elites that do not demonstrate a genuine political will to strengthen democratic institutions, where there is no demonstrated interest in real reforms, which would include an independent justice system and effective enforcement of the rule of law. This is predominant when there is an increased political control over independent institutions from politicians and hidden vested interest groups, acting behind the government. Consequently, the other facet of the strict conditionality begins to act here – “less for less”.
Nonetheless, even in the latter case, strict conditionality has long-term effects, putting constant pressure on those governments, to get them back on the track of reforms. And if the respective Government ignores a frank and open dialogue on internal backlogs or even tries to place the responsibility on the EU institutions for the failures, then the EU manages to build up and maintain its communication with other interested national actors, committed to advancing transformations at the level of institutions, localities, communities or policy sectors. Moreover, in this case, the EU is also reorienting and diversifying its direct support to those actors willing and able to drive the reform agenda and increase the accountability of the authorities and political elites.
However, the EU conditionality can and must become smarter, more targeted, and more tailored to the immediate needs of the country to speed up the transformation process in the Republic of Moldova. This approach would avoid delaying the necessary systemic reforms, when at least declaratively governments commit, but are hesitant about implementation.
What would this mean? First, conditionality must aim to change the crucial elements of the system that needs to be reformed. Justice sector reform is one example. Instead of a general conditionality to ensure the independence of the judiciary, the conditionalities should address key challenges in the justice system and directly support the transformation and protection of the independence of key judicial institutions such as the Superior Council of Magistracy and the Superior Council of Prosecutors.
More EU support should be directed to institutions that show signs of change, independence or are indeed able to ensure a balance among the branches of power. For example, such institutions could be the Constitutional Court, the General Prosecutor’s Office, the Central Electoral Commission or the National Bank of Moldova – key institutions that must act free from political interference.
EU assistance could be aimed at promoting effective policies and measures to discourage and exclude rent-seeking systems, which benefit the hidden affiliated groups that control different political parties or even the government as a whole. An example of this is the limitation of the participation of entities from offshore jurisdictions in public contracts with the state or the application of anti-fraud measures to combat and sanction money laundering. These reforms should be linked to rewards that citizens will benefit from. Such a reward in the case of the Republic of Moldova, an EU Associated country, could be accession to the Single Euro Payments Area (SEPA) or full access to the EU single market.
It is important that EU support continues to help implement the Association Agreement and the Sustainable Development Goals, with a particular focus on public administration reform, administrative decentralization, educational reform, healthcare reform, sustainable economic development, the green economy, digitalisation of services, support to energy and transport infrastructure projects. Strengthened resilience of the societies from the Eastern Partnership countries may happen with specific powered-up support aimed to combat hybrid security threats.
The way forward …
After six years, Moldova faces largely the same challenges and systemic problems. The effort of all actors is more directed towards maintaining afloat our relations with the EU, rather than towards advancing it to a qualitatively higher level.
We understand that there are various reasons and they are largely the same in the countries like Moldova, Georgia and Ukraine. However, the difference lies in the approach towards the internal priorities of these three EU Associated countries and in their relationship with the EU. Today, Georgia is more determined – it has a pro-active diplomacy and tries to seize every opportunity. Ukraine is doing the same. Next, the Moldovan authorities, pro-reform elites, civil society and the EU should concentrate their efforts on initiating a reset of our European agenda.
We must all be generators of solutions and promote a structured and inclusive dialogue; talk openly about the problems we face, be aware of them and implement together the necessary transformations step by step; identify, support and protect institutions that can generate change; hold public authorities accountable and to condemn all those who violate the common values provided for in the Constitution of the Republic of Moldova and in the Association Agreement with the EU.
Ultimately, this approach could help Moldova overcome the challenges it faces, break the vicious circle of internal problems and crises that have perpetuated in recent years, and help us break out of the external isolation in which we found ourselves.
The first opportunity to be seized is to negotiate a new Association Agenda with the EU for the next five years. Therefore, the second half of 2020 will be crucial, providing the opportunity to reset Moldova’s European agenda and the structured dialogue with the EU, with the participation of the government, pro-reform elites, local authorities, business community and civil society. Another opportunity is to engage in the development of the new Eastern Partnership deliverables beyond 2020, which will be agreed next year at the forthcoming Eastern Partnership Summit and will aim to strengthen the internal and external resilience of democratic institutions, the rule of law, the economy and the society at large.
The first political test that will show us if we really want to initiate the reset of Moldova’s European agenda are the next presidential elections. Even if the function and competencies of the President are predominantly symbolic, the organisation of the elections and the findings of national and international observers will influence the further progress of the European path of the Republic of Moldova.
This commentary is prepared within the IPRE project “Policy Dialogue on the Future of the Eastern Partnership”, implemented with the support of the Konrad Adenauer Foundation (KAS) in the Republic of Moldova, as well as within IPRE’s and IPN news agency partnership within the „We and Europe” project. The opinions presented in this comment do not necessarily reflect the position of KAS or IPN.