Political Crisis In Moldova Raises Tension In Neighbouring Romania

Following defeat in a no-confidence vote on November 9, Moldova's centre-right government has toppled from power, plunging the country into its second political crisis in less than a year.

Communists, nationalists and deputies supporting President Petru Lucinschi blocked key budget proposals and economic reforms required by the International Monetary Fund (IMF). An IMF loan of 35 million US dollars was conditional on a series of economic reforms, including the privatisation of Moldova's major industries - wine and tobacco.

Now IMF loans are delayed placing in jeopardy other loans from the World Bank, the European Bank for Reconstruction and Development and the European Union - loans in excess of 150 million US dollars.

This latest political crisis is likely to further aggravate the economic situation in Moldova given the country's problems reflect both its geopolitical position and delays in introducing a reformist economic policy.

Previously one of the richest regions of the USSR - a small but fertile agricultural state sandwiched between the Ukraine and Romania - Moldova has been in continual economic decline since the collapse of the Communist regime.

Moldova's currency, the leu, has dropped in value by 50 per cent against the US dollar in the last year and foreign debts currently exceed 235 million us dollars.

The government's financial crisis has left public sector workers without pay for six months. Many businesses have failed to pay energy and raw material bills and some are reduced to paying employees with goods rather than cash.

The economy has shrunk to one third of its size in the pre-independence era (1991) and remains precariously reliant on economic fluctuations in Russia. Virtually 70 per cent of Moldova's export business is still with Russia and the republic's energy system relies almost entirely on natural gas imports from Siberia.

In the wake of the economic crisis plaguing Russia last year, it was no surprise that the Moldovan economy contracted by a full 10 per cent in 1998.

Moldova therefore faces an important question: should the country orient themselves to the West or to the East? For many politicians the answer appears obvious. Alexandru Mosanu, leader of the ruling coalition in Moldova, said in an interview, "The resignation of the pro-Western Government signifies Moldova's refusal to integrate into Europe and a swing to the CIS and Russia".

On the other hand, Vladimir Voronin, leader of the Moldovan Communist Party, which voted against the government, said that he and his allies "are in favour of continued reforms and democracy, but for the people and not for robbers and crooks".

Political and economic instability in Moldova has always presented a worry to the Romanian government. Following the no-confidence vote on November 9, the Bucharest government halted all exports of electricity to Moldova, citing an accumulated debt of 16.5 million US dollars and the lack of a clear mechanism for repayment.

Romania resumed power exports on November 16, but only after receiving and assurance from the Moldavian President, that the country will honour all international obligations.

Impoverished and unstable itself, Romania can ill-afford to be generous to a neighboring state, despite close economic and cultural ties. Prior to the Soviet invasion in 1939, the bulk of Moldova was in fact part of Romania. Most people in Moldova speak the same language as their neighbours, although they voted in a referendum to call it Moldovan.

During the Stalin era, however, a campaign of forced 'Russification' - including mass deportations - altered the ethnic balance and national identity of Moldova.

Relations between Moldova and Romania remain ambiguous - not exactly friendly, but not hostile. For example, in 1990 the Bucharest authorities decided to aid their neighbours, shipping cartloads of coal into Moldova. The recipients merely grumbled, however, at the inferior quality of the coal compared to the anthracite they used to import from Siberia.

Predicting the future for Moldova is an impossible task and one the Romanian government would dearly like to be free of. Political and economic instability ensures a difficult road ahead for Moldovan independence.

Moldova has two choices, either to reintegrate into the CIS (Commonwealth of Independent States) or to push for closer ties with the European Union. This dilemma encapsulates a matter of strategic importance across Eastern Europe. Like many newly independent states in the region - Moldova and Romania are both struggling to meet the steep entry fees for membership to the Western Europe club.

Marian Chiriac is news editor of the MediaFax News Agency in Bucharest and editor of Foreign Policy, a quarterly published by the Romanian Academic Society.