Preliminary report: One year after the start of the provisional implementation of the RM-EU Association Agreement: What has Moldova achieved in this time?

Author: Iulian Groza,
Policy Moderator
In the European integration field,
The Institute for European Politics and Reforms (IEPR)

Summary

This report is an attempt by the authors to review the progress of the RM-EU Association Agreement implementation within the period of September 1, 2014 – August 1, 2015. The report is not directed at presenting an exhaustive and comprehensive analysis of the achievement level of all planned actions for the Association Agreement implementation in the reference period, but rather tries to present the public opinion, an overview of the process implementation dynamics of the Association Agreement key areas, thereby increasing the awareness of Moldovan citizens on the importance of Association Agreement with EU. In this context, an analysis was made of the key results that have been achieved by the Moldovan authorities and that have been planned prior to the initiation of the provisional application of the Association Agreement, as well as the arrears or missed opportunities in its implementation.

The main source for assessing the progress in Association Agreement implementation is the National Plan for the Association Agreement implementation (NPAAI), adopted by the Moldovan Government on June 24, 2014, which provides, in total, about 1800 steps/actions for implementation till the end of 2016, including over 400 actions that include the implementation deadline – August 1, 2015, including those with a continuous completion term. In the process of finalizing the report, the authors have also relied on other sources of public information, provided by the Moldovan authorities and EU institutions, as well as the outcome of discussions with experts from national institutions, civil society and European experts.

For the purposes of this analysis, the authors initially presented a brief information on the Association Agreement, the key priorities that are reflected in the key instruments of implementation at the national level, as are NPAAI and the legislative program, adopted by the Moldovan Parliament or as agreed with the European Union, such as the RM-EU Association Agenda, which include, in total, approximately 257 priorities with the implementation term by the end of 2016.

The authors also highlighted some main internal and external factors that influenced the dynamics of the implementation process of the reform agenda in the Republic of Moldova, which are, on the one hand unfounded commercial restrictions, imposed by the Russian Federation, as well as the war in the eastern Ukraine, and, on the other hand, the banking and financial crisis, caused by the bank frauds detected in late 2014, and mostly the unstable political situation in the Republic of Moldova.

In the fourth part of the report, the authors come with systematised information of the main achievements and shortcomings, registered in delivering the 5 titles of the Association Agreement, which provide for the implementation measures in accordance with NPAAI. As the preliminary conclusion of the report, the authors note with a certain amount of approximation that out of the more than 400 actions planned in NPAAI, which include permanent term actions, the Moldovan authorities have implemented over 120 actions. At the same time, approximately 280 actions have not been completed or are under implementation. Note that the Government, however, managed to implement almost 50 actions before the deadline, indicated in NPAAI.

Subsequently, based on quantitative data, the authors have analyzed more thoroughly the progress and missed opportunities in some areas with resonance of the Association Agreement, such as judicial reform and fighting corruption, exploitation of the Deep and Comprehensive Free Trade Area with EU, including the preparation progress of the Agreement Association implementation in the Transdniestrian region, as well as some sectoral issues, such as the energy sector. An overview of the foreign assistance recovery process was also presented, provided by the European Union and the reasons that contributed to its suspension during the first semester of 2015. In this context, taking into account the financial support, meant for facilitating the implementation of the European reforms and the untapped opportunities for 2015, until the end of 2015 Moldova could miss about 1.9 billion MDL (i.e. from EU: Euro 40.5 million – direct budget assistance; 7 Million Euro – planned anticipated for 2015 as direct budget assistance for PALV and from the World Bank: 45 million USD).

In conclusion, the change of accents on the European integration agenda on political issues, as well as the crisis in the banking and financial sector have not allowed the continuation of the agreed agenda, the continued implementation of commitments and the use of opportunities for external financial assistance in the originally agreed amounts and terms.

Arrears, recorded in the implementation of the European integration agenda, including the provisions arising from the NPAAI for 2014-2016, are threatening to harness the benefits offered by the Association Agreement, especially those related to trade, including recovery of export quotas by product category. The functionality of enterprises may also be affected in the Transdniestrian region, as to date there is no completed implementation mechanism for provisions of the Agreement in this region. In another context, identified detentions amplify the risks, related to Moldova’s energy security, and ensuring guarantees of an effective judicial system that would fight corruption effectively and discourage investment in various sectors of the economy, including agriculture, and the financial-bank sector.

In this context, having regard to the preliminary assessments of this report, and taking into account the key priorities agreed with the European Union under the Agenda of RM-EU Association from June 2014, the recommendations of the development partners, submitted to the Government on March 4, 2015, and the European Committee recommendations, mentioned in the progress report, published in March 2015, the IEPR experts identified 8 key areas, which are the pillars of progress in the implementation of the Association Agreement, and namely:

(1) Judiciary reform and corruption combating;

(2) Banking and financial sector;

(3) Agriculture and rural development;

(4) Horizontal issues concerning the implementation of the Deep and Comprehensive Free Trade Area with the EU – DCFTA (i.e. technical barriers for trade, sanitary and phytosanitary standards, exploitation of export quotas);

(5) Preparing the implementation DCFTA in the Transdniestrian region;

(6) Competition;

(7) Energy sector;

(8) External assistance from the EU.

To this end the authors are proposing to closely monitor in the forthcoming period the quantitative and qualitative progress, made ​​by the Moldovan authorities in achieving the 8 key areas, set out by the Association Agreement. Thus, by March 2016, the IEPR experts are going to publish 8 thematic analyses, devoted to each of the eight areas of evaluation. The first analysis of this kind shall be issued with this report and will be dedicated to our country’s commitments towards the European Union in the field of Competition. To highlight the dynamics in achieving the objectives of the Association Agreement, there will also be published quantitative periodic reports for measuring the implementation progress dynamics, particularly with respect to the 8 key areas.

Quantitative and qualitative analysis of the 8 key areas of the Association Agreement is an attempt to highlight the priorities that have grown in significance. According to the authors, if the Republic of Moldova succeeds in advancement of commitments, corresponding to these areas, then it could register a quantum leap in terms of reforms and achieve qualitative progress in the implementation of the Association Agreement. Another argument, this time practice a one, is to give the public opinion a more focused continuous monitoring of the Agreement implementation progress. The authors also believe that this exercise will help increase the awareness of citizens about the importance of the Association Agreement for the modernization of Moldova.

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