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Jul 17, 2015 | 09:15 GMT

7 mins read

Moldova's Instability Could Be Romania's Opportunity

Moldova's Instability Could Be Romania's Opportunity
(DANIEL MIHAILESCU/AFP/Getty Images)
Summary

Moldova and Romania are growing closer. The two countries have a long shared history — Moldova was once a province of Romania. Both Moldovan President Nicolae Timofti's visit to Romania and pro-Romanian demonstrations in Moldova showcase this trend. Although an actual reunification of Romania and Moldova is highly unlikely, the recent rallies and the positive reaction from top Romanian officials are signs of increasing Romanian influence in Moldova. In the context of the standoff between Russia and the West, Romania's efforts are likely to be complicated by Moldova's internal divisions and Russian opposition. However, Bucharest could significantly increase its influence in Chisinau's ailing financial sector in the near term.

Moldova, a small but strategic country located in the European borderlands, is an important component of the ongoing standoff between Moscow and the West. Both Russia and the European Union have long competed for influence in Moldova, whether by supporting political parties and social movements, seeking Chisinau's participation in their rival trade blocs, or boosting security cooperation with Moldova in their competing military alliances.

Like Ukraine, Moldova has in recent years opted for closer ties with the European Union, signing an association and free trade agreement with the bloc in 2014. Romania has been a particularly strong supporter of Moldova's Western integration efforts. The two countries have deep historical and cultural ties: The territory of present-day Moldova was a province of Romania for centuries until the Russian Empire annexed it in the early 19th century. Moldova returned to Romanian control between 1918 and 1940, but was once again swept under Russian control with its incorporation into the Soviet Union. Upon Moldova's independence in 1991, some segments of the population called for reunification with Romania, but the government opted to retain its status as an independent state, which it had gained for the first time in its modern history.

Romania nevertheless maintained close economic and political ties with Moldova. Groups and organizations in Moldova that continued calling for reunification were on the margins of Moldova's political spectrum as Chisinau oscillated between governments supporting close ties with Moscow and those supporting closer ties with the West. Romania, which joined the European Union in 2007, since then has opted to support forging closer ties with Moldova by advocating for Chisinau's integration into the European bloc.

Moldova's Political Fragility

Since 2009, the Moldovan government has favored integration with Europe. However, divisions within Moldova — particularly between the pro-EU Democratic and Liberal Democratic parties and the Russian-oriented Communist and Socialist parties — have created significant political deadlock in Chisinau.

Moldova's aspirations to integrate with Europe suffered a major blow recently when pro-EU Prime Minister Chiril Gaburici resigned in June. Gaburici stepped down after failing to bridge the country's political divisions. He was also in the midst of a conflict with state prosecutors and officials within the financial and banking sectors. Moldova was already in the throes of a major economic slowdown. The collapse of the government has prompted international financial institutions such as the World Bank and International Monetary Fund to halt their economic programs in the country. Additionally, the European Union announced July 7 that it would suspend financing for Moldova until a new government is formed. Moldova's pro-EU parties announced their intention of forming a new government before the end of July, though strong divisions between these groups remain.

Moldova and Transdniestria

Moldova and Transdniestria

This has played into the interests of Russia, which has sought to block Moldova's EU integration efforts much as it has with Ukraine. Russia's strong military presence in the breakaway territory of Transdniestria and in pro-Russia pockets of Moldovan territory such as Gagauzia give Moscow significant leverage over Chisinau. The collapse of the Gaburici government, along with the disputes among Moldova's pro-EU parties, has been an important factor in the pro-Russian Socialist party's growing popularity. The prolonged instability within Moldova and the European Union's enlargement fatigue have made EU accession for the country a distant possibility.

Romania's Chance

However, Moldova's political crisis — and particularly the country's growing financial difficulties — could also provide an opportunity for Romania. Moldova's poor economic situation, which the public believes was caused largely by corruption, could explain why recent demonstrations supporting reunification with Romania were some of the country's largest and most sustained in recent years. On July 5, a demonstration organized by the group Action 2012 brought out between 3,000 and 5,000 people in Chisinau. In the following week, around 1,000 people marched to the Moldovan-Romanian border and then took a train to the Romanian capital of Bucharest, ending their demonstration on July 12. Romanian President Klaus Iohannis did not meet with the protesters but acknowledged the march and said following the demonstration that "people from both banks of the Prut River [which marks the border of the two countries] will once again be part not only of the same union but also of the same communion."

Comments such as these show that the Romanian leadership does not advocate reunification, but that Bucharest remains a key supporter of closer ties with Chisinau within the context of the European Union. Although Iohannis' tone is not dramatically different from the usual diplomatic message from Romania, by adding the word "communion" the Romanian president hinted at a more realistic approach, alluding to the formation of a community — a web of relationships, both economic and political, that undergirds bilateral relations and supports Moldova's European ambitions. These comments came after Iohannis met with Timofti in Romania on July 8 and called on Moldova to make the necessary reforms so that it can join Romania in the European Union.

Prior to the meeting between Iohannis and his Moldovan counterpart, a delegation from the National Bank of Romania paid a less publicized but potentially significant visit to Moldova. The official purpose of the visit was the launch of an EU-supported twinning project aiming at strengthening the Moldovan central bank's capacity in the fields of regulation and supervision. The project received 1.2 million euros ($1.3 million) from the European Union to bring technical assistance into Moldova and will be implemented by the National Bank of Moldova and a consortium comprising the National Bank of Romania and the Netherlands' central bank. The project comes at a key moment for the Moldovan economy, which is reeling from the disappearance of more than $1 billion — equivalent to more than 12.5 percent of the country's GDP — from three of Moldova's largest banks earlier this year and an ensuing corruption scandal.

Knowing that foreign banks will likely not go into Moldova at a time when 80 percent of the country's banks are under surveillance programs, Romania is in a good position to assist the country, given that its understands Moldova well and has a strategic interest in bringing Chisinau out of Moscow's orbit. Moreover, as the Romanian banking sector shares its expertise with the Moldovan sector, Bucharest could facilitate Romanian business investment into Moldova.

Although these conditions offer opportunities for Romania, Bucharest is well aware that it faces obstacles in strengthening its influence in Chisinau. For many years, Russia was Moldova's largest trade partner, but politically motivated trade restrictions have decreased Moldovan exports to Russia and increased exports to the European Union and especially to Romania. In 2014, Moldova exported 18 percent of its products to Romania versus 11 percent to Russia, and Moldova's fruit exports to the European Union — many of which go to Romania — have increased by more than 60 percent in the first six months of 2015.

However, Moscow does retain a strong presence in Moldova's financial sector. Roughly 70 percent of Moldova's banking sector reportedly is controlled by Russian capital, and the head of Moldova's largest bank, Moldindconbank, lives in Russia and has political connections there. But major banks like Moldindconbank have come under greater scrutiny and contributed to growing political problems within Moldova as a result of the economic crisis. Therefore, Moldova's growing financial weaknesses and Romania's ability and willingness to help alleviate some of its economic problems could make this a topic of growing interest for both sides in the future. 

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