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Abstract

EU–Moldova relations have improved dramatically over the last four years. A new legal framework to reflect Moldova's more ambitious European agenda has been negotiated and sectoral integration in various fields has gathered rapid pace. Despite impressive progress, however, the path has not been smooth, and Moldova's European integration is not yet irreversible. Moldova's pluralism is still weak, institutions need time for consolidation and anti-corruption efforts are yet to demonstrate results. Russia has also often been a complicating factor. As Moldova is about to embark on the implementation of an Association Agreement agenda, the EU has to reassess recent policy on Moldova, identify potential pitfalls along the road and attune its approach in order to circumvent probable obstacles and thus maximise the effects of its transformative power in the coming years.

Keywords

EU Moldova Eastern partnership European integration Russia Transnistria Deep and Comprehensive Free Trade Agreement

Introduction

EU-Moldova relations have expanded tremendously since 2009. From its earliest days in power the pro-European coalition in Chisinau sought much deeper and closer relations with the EU. Reflecting Moldova's European aspirations, the EU allocated more human, financial and diplomatic resources to relations. Moldova rapidly became the largest recipient of EU aid per capita in the neighbourhood. This overlap of political will in Brussels and Chisinau, backed by financial resources, helped Moldova to catch up and, in some areas, to outpace Ukraine and Georgia on European integration. Soon Moldova was labelled the Eastern Partnership (EaP) front runner and was described by top EU officials as ‘an issue of strategic relevance for Europe’ (European Commission 2014). Today Moldova is the only state in the eastern neighbourhood where the EU can, in 2014, deploy almost simultaneously the most powerful transformative instruments of the EaP, namely a visa-free regime and the Deep and Comprehensive Free Trade Area (DCFTA) encompassed in the Association Agreement (AA). After setbacks in 2013 in Armenia and Ukraine, Moldova offers the EU in 2014 occasion to give a new lease of life to the EaP. At the same time, the combination of societal and economic tools the EU is about to apply could put Moldova irreversibly on the path towards Europe. However, there are many short- and medium-term factors that overshadow a positive outlook for Moldova, including the fragility of the pro-European coalition, widespread corruption and Russia's penchant for zero-sum behaviour in the neighbourhood. Moreover, as Moldova advances to the more challenging stage (AA implementation), the EU should recalibrate its support as well. Before addressing lessons learned by the EU in Moldova and what the EU could do to smooth Moldova's European journey, this article will first take stock of progress in EU–Moldova relations over the last four years.

Taking stock

The popular unrest which followed what were perceived by the public as rigged parliamentary elections in April 2009 and the way the government handled it sent EU–Moldova relations to an all-time low. The government in Chisinau cracked down on protesters in the aftermath, accused Romania of causing the unrest and introduced visas for Romanian citizens, going against previous agreements with the EU. However, the pro-European coalition quickly managed to repair relations with Brussels and to instil a positive atmosphere. The Moldovan authorities expressed a commitment to address human rights issues and to set up a permanent dialogue with the EU in this field. Visa requirements for Romanian citizens were lifted. As a result, the EU unlocked the process and Moldova began negotiations on an AA in early 2010. The global economic crisis hit Moldova hard in 2008–9. The new government in Chisinau faced declining budget revenues and an increasing budget deficit. Between 2010 and 2012 the EU provided Moldova with macro-financial support (€90 million) which was tied to conditions envisaged in the assistance programme previously concluded by the government in Chisinau with the International Monetary Fund (IMF) (European Parliament 2010). Overall, the combined macro-financial support from the IMF and the EU helped to redress the situation with the public finances, boost currency reserves and spur a new cycle of economic growth in Moldova. In 2008 the EU granted Moldova Autonomous Trade Preferences (ATP), which facilitated access for Moldovan producers to the European market. As a result of ATP trade, turnover between the EU and Moldova climbed from €1.7 billion in 2009 to almost €3 billion in 2012. The EU became Moldova's largest trade partner by far (54 % share) (European Commission 2013a). The ATP regime was due to expire at the end of 2012. To continue the positive trend in bilateral trade, in 2011 the EU decided to extend the ATP until 2015. In the meantime, in 2012, after Moldova passed important pieces of economic legislation, the EU opened talks on a DCFTA. By removing the remaining tariff barriers and eliminating non-tariff trade barriers, the agreement will pave the way for the deep economic integration of Moldova with the EU. After a three-year negotiations marathon (15 rounds on the AA, 7 rounds on the DCFTA), in June 2013 Moldova completed negotiations, and initialled in November 2013 documents at the EaP Summit in Vilnius. The AA is scheduled to be signed and ratified in June 2014. In due time, Moldova and the EU will hold consultations on the AA agenda which will aim to set priorities for government actions after it enters into force.

While working on the legal framework to upgrade bilateral relations, Moldova and the EU made headway in several fields, building sectoral integration. In 2010 Moldova joined the Energy Community and began implementing the commitments pertaining to energy efficiency, renewable energy, and the electricity and gas sector assumed under the treaty. To support the government's efforts, the EU sponsored an energy and biomass project (€14 million), and energy sector reforms (approximately €43 million) (UNDP 2012). As a result, around 130 social and public institutions will switch from gas to biomass heating systems (Agency for Energy Efficiency 2012). Among other factors, the project contributes to the steady decline of gas consumption in Moldova. In 2013 alone gas consumption by state-financed institutions dropped by 15.8 % (Infotag 2014). Given Moldova's overwhelming dependence on Russian gas, the EU also supported projects to diversify sources of gas imports. The EU allocated €7 million to a Romania–Moldova gas interconnection scheduled to come on stream in the second half of 2014 (European Commission 2013b). Significant progress has been made in the mobility and transportation field. In 2012 the EU concluded an agreement with Moldova on the establishment of a Common Aviation Area. The gradual liberalisation of Moldova's air transportation market brought the first low-cost flights to and from Chisinau in 2013. Air services have become more affordable for Moldovans. Via the European Bank for Reconstruction and Development and the European Investment Bank, the EU also financed projects to rehabilitate the road infrastructure across Moldova. The EU launched a visa liberalisation dialogue with Moldova in 2010. In 2013, after Moldova successfully implemented a visa-free action plan, the European Commission recommended the lifting of visa requirements for Moldovan citizens who hold biometric passports. The final decision was taken in March, enabling Moldovans to travel visa-free to the EU as of 28 April 2014. Last but not least, the EU allowed participation of Moldovan students and professors in the Erasmus Plus programme, substantially expanding their educational exchange opportunities.

Since 2010 the EU has opened up some Community agencies and programmes to Moldova. Consequently, in2011 Moldova joined the EU Research Programme. In 2012 Moldova was among the first of the EaP states to negotiate and conclude a framework document on participation in EU crisis-management missions. Overall, an intensive period of socialisation between the Moldovan bureaucracy and the EU has taken place over the last four years. Moldovan officials have not only become acquainted with the EU's formal working procedures, but have also learned how to foster consensus among EU member states on issues of particular interest for Moldova. Now, in 2014, Moldova's state apparatus has a much better understanding than before of how the EU functions. This is very important as Moldova's strategic objective is full membership of the EU.

Lessons for the EU in Moldova

Although the list of accomplishments is impressive, the last four years have not been trouble free for the EU in Moldova. While Moldova as a state is still, in many ways, a project under construction, several lessons are discernable for the EU.

First, one should not put all one's eggs in one basket. Immediately after the pro-European coalition succeeded to power, the EU naturally threw its weight behind it as their agendas overlapped. At the same time, the EU did not dedicate more effort to cultivating ties with the main opposition force, the Communist Party (Partidul Comunistilor din Republica Moldova, PCRM). Moreover, the EU only half-heartedly raised concerns regarding the harassment of media outlets associated with the PCRM (e.g. NIT TV). The PCRM is not an easy partner with which to engage in dialogue. But the EU's almost total focus on the pro-European coalition weakened its position on the Moldovan political scene. The PCRM became more radicalised and switched from a pro-European discourse (adopted while in power) to a Eurasian one. It increasingly attacked the EU for openly supporting just one political force and leaned further towards the Kremlin. With no other options, the EU had to stick with the pro-European alliance, a fact that has undermined its ability to press the government for deeper reforms. During the political crisis in the spring of 2013, when the pro-European government fell victim to intra-coalition squabbles and the prospects of the Communists returning to power were pretty high, the EU's plans in Moldova were on the verge of collapse. Several rounds of shuttle diplomacy helped to restore the fragile coalition. However, the lesson to be learned is that the EU needs to offer a more inclusive political dialogue in order to keep its policy options open and avoid overdependence on one political force.

Second, Russia should not be underestimated. From the early stages of development of the EaP, Russia has shown irritation with the EU's attempts to strengthen its neighbourhood policy in the east. Thus there were expectations that Russia might play a spoiling game in Moldova as well. However, the scale of Russia's obstructive actions in Moldova seemed to surprise many in Brussels. As a result, Russia gained the tactical initiative and forced the EU to become reactive. In 2011 the Kremlin, via the Russian Orthodox Church, energised a campaign in Moldova against an anti-discrimination law which was part of the visa liberalisation dialogue with the EU. To placate those carrying out the church-led hate campaign against the lesbian, gay, bisexual and transgender community, the EU accepted the adoption of a slightly diluted version of the anti-discrimination law by the Moldovan Parliament, while the EU commissioner for enlargement and neighbourhood policy attended a gay pride event in Chisinau. In 2012 the Kremlin pressured Moldova to give up its membership of the Energy Community (and consequently the third Energy Package) in exchange for a new long-term contract for gas deliveries from Gazprom. The EU tried to counter Russia on the bilateral level and agreed to delay implementation of the third Energy Package (regarding the gas sector) in Moldova until 2020. In 2013 Russia, via its proxies, worked to ignite tensions in the ‘security zone’ between Moldova and Transnistria. The EU was again put in a situation in which it had to work with Moscow and Tiraspol in order to calm the situation. In 2013 Russia banned the import of Moldovan wines; a few months later the EU totally opened its market to Moldovan wines. Thus, the EU should anticipate the obstacles Russia could erect and be proactive in order to prevent the success of Moscow's spoiling tactics. As the examples mentioned above show, the EU response has varied from delaying tactics to fast-tracking some decisions. Essentially these reactions were externally induced. It is important that the initiative comes from the EU side and not the other way around, otherwise the EU will constantly be playing catch-up with the Kremlin.

Third, speed matters a lot. Some technical procedures take too much time to complete. In the meantime, the document the EU intends to have Moldova sign could be killed off due to political developments in the state, which exists in a situation of reversible pluralism and has a weak governing majority. Moldova's top officials recognise that without support from EU member states, the AA would not have been ready for initialling by the Vilnius Summit. While the AA was initialled in November, in the best-case scenario it will only start to take effect almost six months later, if the pro-European coalition survives until then. This matter has been tacitly recognised at the EU level. The EU institutions are again under huge pressure from EU member states to compress the time and get the documents ready for signature faster than usual. The same is true in cases of funds disbursements, which also often happen with significant delays.

Last but not least, matters of economics need to contribute to strategic goals. Because of its size and level of economic development, Moldova hardly represents a major economic interest for the EU. Moldova ranks in 75th place among the EU's trading partners and has a 0.1 % share in EU trade (European Commission 2013). At the same time, the EU has a strong interest in seeing neighbouring Moldova stable, secure and conflict free. This state of affairs often weakens the linkage between the economic instruments and strategic interests of the EU in Moldova. The Directorate-General (DG) Trade, responsible for DCFTA talks with Moldova, was initially reluctant to allocate human resources for negotiations, not least because of economically more important ongoing trade talks with international partners (e.g. the free trade agreement with Canada). Later in the process, DG Trade adopted a more restrictive approach regarding how to make a DCFTA work in Transnistria, where the EU has managed to increase its influence during the last decade via trade. These issues have been partially addressed by the European External Action Service and DG Trade. Ultimately, DG Trade provided more human resources for DCFTA talks with Moldova. Although the ATP will be cancelled once the DCFTA starts to have an effect in Moldova, following a proposal of the government in Chisinau, the EU has approved the extension of the ATP for Transnistrian companies until the end of 2015. Nonetheless, much stronger coordination is needed between economic and political institutions in order to attain the EU's strategic goals in Moldova.

Making Moldova's European choice irreversible

In the short term the main issue on Moldova's European agenda is to sign and ratify the AA. The EU has a role to play in speeding up the process to prepare the document for signature, as well as in preserving the ruling coalition until the signature and ratification procedure is complete. If it acquires legal force, the AA will serve as a constraint for any political force which ascends to power after the parliamentary elections in Moldova, scheduled for November 2014. Nonetheless, the EU also has to think about the post-election agenda in Moldova. As the AA is a complex document that will require a high level of inter-agency coordination, the EU member states with relevant experience (e.g. Poland, Romania, the Baltic states, the Czech Republic and Slovakia) could share their expertise on how to streamline bureaucratic mechanisms towards the implementation of the AA agenda. The EU should also pay attention to sectoral reforms. Although the DCFTA will bring numerous benefits in the medium and long run, it will generate some costs in the short term. The EU should be ready to minimise these and sustain development of the agriculture sector, which employed 28 % of the workforce and accounted for 18 % of GDP and 41 % of exports in 2013 (Capital Market 2012; Agroinfo 2014). So far, the judicial reforms in Moldova have been mainly about amending legislation and taking small steps to clean up the work of judges, while anti-corruption efforts have targeted low- and mid-level corruption. After the elections the EU has to push more actively for judicial reform and a more aggressive anti-corruption campaign that will target high-level corruption. The EU should help to fortify the National Commission for Integrity, which is empowered to review public servants’ declarations of income and monitor conflicts of interest. This will send a strong signal to the political and economic elites used to the old ways of doing business. To this end, the EU has to continue to invest in civil society, which could be a useful partner in exposing shadowy practices and non-transparent behaviour on the part of political actors and institutions.

Across the post-Soviet world, energy has a geopolitical flavour. Moldova is no exception. The gas interconnection with Romania is an important piece in a multistage project to provide Moldova with an alternative to Russia as a source of gas. The EU should financially support the second and third stages of this project, namely the construction of a compressor station in Romania and the laying of the gas pipeline from Ungheni to Chisinau. Financial assistance for electricity network interconnections with Romania is also vital for Moldova's energy security. As the ATP for Transnistrian companies will expire in 2015, the problem of how to make the DCFTA work in Transnistria will become more urgent. The Kremlin will push Tiraspol to stay away from the DCFTA, but the EU should not lose the economic clout it has built up in Transnistria over the last decade. Transnistria exports 70 % of its goods to the EU and Moldova (Milevska 2014). One way to prevent the disruption of trade links is to apply the DCFTA on an ad hoc basis. Transnistrian companies which comply with EU standards and have been certified by the Moldovan authorities should benefit from the DCFTA's provisions. The mandate for the EU's monitoring mission on the border between Ukraine and Moldova expires in November 2015; the EU should think in advance about how the prolongation of the mandate could support the implementation of the DCFTA in Transnistria. In the end, it is not enough to do many useful things; the EU needs to communicate in a systematic way about its projects in Moldova. Russia recently used conservative messages in an attempt to sway the Moldovan public to oppose European integration and instead push for accession to the Russian-led Customs Union(CU) and later to the Eurasian Union. The paradox is that, despite the fact that Russia provides no development aid to Moldova and often acts to worsen the economic situation (e.g. the wine import ban), 43 % of Moldovans would choose accession to the CU at the expense of the EU (Institute for Public Policy 2013). Soviet nostalgia, exposure to Russia-centric media and poor information on EU integration benefits are just a few of the reasons behind this choice. Therefore, the EU needs to conduct an ample public diplomacy campaign that will demonstrate in real terms how European integration would improve the lives of different social categories of people, both now and in the future. It should particularly target the most Eurosceptic constituencies and regions/cities of Moldova (e.g. Gagauzia, Taraclia and Balti).

Conclusion

The ascendance to power of the pro-European coalition in Moldova provided a window of opportunity to substantially deepen EU–Moldova relations. Probably the easiest part of this process will end in 2014, when Moldova is expected to sign and ratify the AA. A more challenging period, related to the implementation of the accord, lies ahead. Although the AA is a long-term instrument of change, the EU should not disregard the use of short-term tactics to keep Moldova on a European path and to insulate it from external pressures. More robust support is all the more important in the context of the Russian invasion and annexation of Crimea. The lessons learned by the EU in Moldova should help to attune its approach beyond Moldova as well. For instance, the positive conditionality of the visa liberalisation dialogue in Moldova should be replicated in Georgia to push for more reforms in related fields. Moldova's experience with a visa-free action plan should also forewarn the EU and Georgia about potential obstacles (e.g. Russia and the Orthodox Church's alliance against anti-discrimination legislation). The consequences of a weak public diplomacy campaign in Moldova could serve as an important lesson for the EU when it revamps its efforts to Europeanise the still-divided Ukrainian society. At the same time, developments in Moldova, coupled with those in Ukraine, pose serious questions pertaining to the EU's policy towards Russia, namely how to deal with the Kremlin's ambitions in the overlapping neighbourhood. Last but not least, as Moldova gets closer to the EU, the question of membership (the most powerful carrot the EU has) looms on the horizon. Should the EU be ready to explicitly offer such a prospect to Moldova, it would have an impact on the future of Eastern Europe as a whole.

Footnotes

Stanislav Secrieru is Senior Reserach Fellow at the Polish Institute of International Relations. Previously, he worked as an affiliated expert at the Romanian Centre for European Policies in Bucharest.

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