Moldova’s Weak Democracy Is a Growing Risk for Europe
The country’s politics have been captured by a corrupt elite, creating a worrying security risk on the edge of Europe.
The outcome of Sunday’s election portends badly for Moldova’s prospects to resuscitate its democracy. The results likely herald a continuation of the current elite tandem that captured state institutions, stifled the independent media, encroached on civil society’s efforts to keep them accountable, and diverted international attention from the real problems that the country faces.
As they are consumed by ongoing domestic issues of their own, European governments and the EU may not have the necessary attention span for Moldova’s travails. But endorsement of, silence at or hesitance in the face of these election results would signal a tacit approval for more democratic backsliding. Strengthening alliances with authoritarian regimes, abetting sophisticated international money-laundering schemes, and exploiting the uncertain status of the breakaway region of Transnistria all push regional security risks to new heights.
The status quo
The elections generated a hung parliament with four parties entering the legislature. While the democratic opposition of the ACUM bloc showed remarkable resilience, any new power arrangements will be led by the old guard. The pro-Russian Socialists came in first, winning 35 seats of the 101-seat parliament, but they need a government coalition partner. So do the Democrats, a so-called pro-European party led by Vladimir Plahotniuc, who won 30 seats.
President Igor Dodon’s previous statements seem to indicate an alliance with the Democrats, the former incumbents, is not an option for the Socialists. But their actions suggest the contrary. Nominally rivals, the two parties have shown the ability to cooperate in the past when it suited their interests, most notably over the passing of a damaging electoral reform law which significantly tilted the playing field in their favour during this election.
Since a coalition with the Democrats would disappoint the Socialists’ power base, and the Democrats may need time to craft a majority by luring individual MPs, early elections are a possibility. Since both President Dodon and the Democratic Party are currently advocating a balanced foreign policy between east and west, a sharp shift towards Russia is unlikely.
Quid pro quo
However, with increasing isolation from the EU and the community of consolidated democracies, Moldovan elites are repositioning themselves by strengthening relations with states such as Russia, China, the Arab states and Turkey, which are interested in increasing their presence in the region but do not ask for democratic reforms that cut through domestic vested interests in return for assistance.
Moldova’s banking and judicial systems were at the core of the ‘Russian Laundromat’, a scheme to launder at least $20 billion worth of Russian assets of dubious origin to Western banks between 2010 and 2014 when an alliance including the Democratic Party was in power. For the past three years, President Dodon was a frequent visitor in the Kremlin, and the Socialists’ electoral campaign was allegedly sponsored with Russian money.
The competing attempts of Dodon and Plahotniuc to improve ties at any cost with Turkish President Recep Tayyip Erdogan should also raise concerns.
In September 2018, seven Turkish citizens teaching in one of the best Moldovan high school networks were expelled without due process, allegedly in exchange for the renovation of the Moldovan presidential palace on Ankara’s bill. A bilateral agreement signed in October 2018 allows Turkish citizens to visit Moldova only with domestic identity cards – a troubling development given the broad range of security challenges in Turkey and its immediate neighborhood.
In another development in May 2018, the Moldovan government passed a law that allows foreign investors to acquire Moldovan citizenship for €100,000. Done in an attempt to boost weak levels of investment, anyone can acquire a Moldovan passport within 90 days without having his or her identity disclosed. With weak checks on state institutions and opaque processes, experts worry about the potential of this law to legalize ‘dirty money.’
In addition, this allows citizens of other countries to freely travel within the EU as Moldova enjoys a visa-free regime. In March 2017, President Dodon enticed Russian businessmen with this very prospect.Breakaways and borders
Meanwhile in Transnistria, a new threat that easily transcends borders is rising – crypto-currency mining.
A forthcoming study from Sergiu Tofilat of Watchdog.md, a Moldovan think tank, has shown that since January 2018, when Transnistrian authorities adopted a law on developing blockchain technologies, bitcoin mining has boomed. According to the report, up to $900 million can potentially be laundered annually through the mining of bitcoins.
This has been aided by the fact that Transnistria’s energy is largely generated by imported Russian natural gas, which the regional separatist authorities do not pay for. Instead, it accumulates as debt in Moldova’s national government accounts.
The blockchain capacities which are already online bring an additional $15.5 million per year directly to Transnistria’s budget, bypassing the Moldovan government. Only a small share (around eight per cent) of the $8.7 million that was needed to install new blockchain capacities was imported through Moldovan customs.
With more money coming directly into its coffers, the breakaway Transnistrian authorities are strengthened. The Moldovan elites are aware of the latest developments but there is no evidence of any measures to stop it.
European reticence in the face of such growing threats would also damage its own reputation in Moldova and in neighboring countries. The EU may become less credible for some segments of society that are still fighting for a European future at home. It is thus crucial for the EU and European governments to react appropriately and speak more bluntly to the newly-elected elites.
Europeans should not cave in to the new government’s request to ‘reset’ relations without prior clear progress on reforms within the framework of the EU’s Association Agreement with Moldova. Restoring the fundamentals of fair elections, an independent judiciary and anti-corruption bodies are a must before any discussions of renewed financial assistance can start.
A firm stand on the preconditions of a reset of relations may deter further regression at the domestic level, and at least preserve the fragile security status quo at the EU’s eastern border.
First published as Expert Comment, Chatham House, February 26, 2019