Moldova in 2021: Political and Economic Turbulence Could Worsen Emigration

The negative effects of the coronavirus pandemic and internal political fights could paralyze the country next year – and encourage even more people to leave, experts warn.

Even with a pro-European president with good relations with Brussels at the helm, the political forecast for Moldova in 2021 promises to be turbulent.

Pro-Russian political forces, represented by the Socialist Party in Moldova, PSRM, still have a majority in parliament, where they govern in coalition with the Pro Moldova faction, composed mainly of deputies with a left-wing vision.

The former pro-Russian President, Igor Dodon, will meanwhile return to the leadership of the Socialists, and will resist the pro-European reformist agenda of the new president, Maia Sandu. Their fierce battles could paralyze the country.

And, as a parliamentary republic, the prerogatives of the new president are limited. Without the support of a parliamentary majority, which would then form a pro-European government, Sandu’s political agenda will continuously be countered by Dodon and the PSRM.

Sandu claims the current parliamentary majority is no longer representative of the country, and that “today in parliament there are not 51 well-intended deputies” out of 101. She says pro-European forces cannot install a government in these circumstances.

“The shortest path to early parliamentary elections is the resignation of [PM] Ion Chicu’s cabinet. I told him this – and he agreed with me,” Sandu told a political talk show broadcast by cotidianul.md on December 10.

There are three scenarios by which parliament can be dissolved: if a majority in parliamentary votes for it; if the government resigns; or if parliament is totally inactive for three months and does not vote on any laws.

Sandu and the pro-European forces are pushing for the dissolution of the current parliament and for snap elections in the hope of the assembling a new pro-European majority.

But this scenario is problematic. Even if they succeed, most polls suggest that, apart from the Action and Solidarity Party, PAS, no centre-right forces will cross the 6-per-cent threshold needed to elect MPs.

The same surveys show that the Socialist Party, Our Party and the Sor Party, all of them with leftist and pro-Russian views, would all cross the threshold into parliament.

Legacy of laws rushed through by Socialists

The year 2021, therefore, promises to be a challenging year for Sandu and the pro-European forces.

After Dodon’s defeat in the presidential election, the PSRM and its For Moldova allies at the beginning of December 2020 voted through several controversial laws at high speed.

Among these fast-track laws was one transferring control over the Intelligence and Security Service, SIS, from the presidency to parliament.

Another returned a former stadium in Chisinau, where the US planned to build a new embassy, to state ownership.

Another law has given Russian special status as a language of inter-ethnic communication.

The PSRM also voted to give special legal status to Gagauzia, an autonomous ethnic Turkish region in Moldova – and repeal the law curbing television broadcasts from Russia.

“When bills affect people’s feelings, such as many of those adopted, they must be treated with the utmost care and not voted on in a rush,” the director of ADEPT, a political think tank in Chisinau, Igor Botan, said.

Navigating between Russia and the West

In foreign policy, Sandu will resume traditional closer relations with neighbours Romania and Ukraine, and the country’s biggest donor and development partner, the European Union.

After the first visit in five years by the President of Romania, Klaus Iohannis, Sandu will visit Kyiv, in Ukraine, in January. With both neighbours Dodon had virtually frozen presidential relations since 2016, when he made provocative statements about both states.

Later, most likely, Sandu will go to Brussels to hopefully reopen the flow of European funds, which Chisinau desperately needs.

“The route to removing Moldova from isolation passes through the Bucharest-Kiev-Brussels axis,” Botan, at Europa Libera, said.

Financing a non-reformist government that is politically controlled by the Socialists will not work in Sandu’s political favour, though it could save Moldova from economic collapse, experts say.

As for Moscow, the first signs of disputes already appeared even before Sandu was invested as President.

She had called for Russia to withdraw its troops from Moldova’s breakaway region of Transnistria. This position is not new; pro-European forces have made the same call repeatedly.

However, Russian officials still responded with hostile rhetoric. Clearly, Moldova-Russia relations in 2021 will not be friendly ones at a presidential level.

Not looking good, down on the farm

Hit by the coronavirus pandemic, the economic signs are not encouraging. Beyond this, the battle between the presidency and the parliamentary majority will add more instability.

An essential question for 2021 is what the new state budget will look like, and where financial resources will be distributed.

The economy was severely damaged by the pandemic, but also by a severe drought, as Moldova is an agricultural-based economy.

The drought led to a major fall in agricultural production. In January-September 2020, agriculture decreased by 25.3 per cent, a loss of about 21 billion lei [about one billion euros.]

Vegetable production fell by 35.5 per cent and livestock by 2.8 per cent. The biggest decreases were in sugar beet, soybeans, corn, wheat, sunflower and rapeseed.

These budget issues are to be debated in parliament by the end of the year, where the majority is already busy rejecting pro-European opposition amendments.

Spending in 2021 must be weighed in the context of the latest economic figures and indicators of the Ministry of Economy, which are largely grim.

Moldova saw its economy contract by 14 per cent in the second quarter of 2020, after a fall of 7.2 per cent in the first quarter.

Most economic sectors contributed to GDP’s negative evolution in 2020, with significant influences noted in internal trade in goods.

Budget revenues remain below the previous year. About 50.1 billion lei [about 2.5 billion euros] was collected for January-October 2020, a decrease of 1.7 per cent compared to the same period in 2019.

At the same time, government spending rose by 8.5 per cent, amounting to about 57.2 billion lei. The budget deficit reached a new high of at least 7.1 billion lei , about 350 million euros.

State debt grew in 2020. Since the beginning of the year, it has increased by 20.6 per cent to reach 63.3 billion lei, or about 3.15 billion euros.

Domestic state debt amounted to 28.6 billion lei – an increase year on year of 23.3 per cent. At the same time, external state debt is now about 2 billion US dollars (34.7 billion lei), having risen by 19.6 per cent.

New migration wave on the cards

Economic experts from the think tank Expert Grup wrote in a study that the way the Moldovan authorities managed the two major crises of 2020 – the pandemic and the drought – revealed the fundamental vulnerability of the country, a low sense of statehood among the country’s governors and society

“The approach to the management of the country and the lack of policies that would ensure the systemic solution of the country’s major problems, making Moldova more resilient in the long run, reveals a tiny, almost invisible, sense of statehood,” the study said.

It warned that Moldova could face serious social problems.

“The coronavirus crisis and the inefficiency of its management could stimulate a new wave of migration that will aggravate the demographic situation,” it added.

Moldova already has one of the highest emigration and depopulation rates in Europe; and, 60 per cent of those who emigrate are young people, up to 30 years old.

Thus, against a background of economic crisis in 2021, the country could face a new wave of migration.

However, remittances from Moldovans working abroad increased for five consecutive months in 2020. “In October 2020, individuals transferred 23.6 per cent more than in October 2019 from abroad through banks in Moldova, the Ministry of Economy said.

“This substantial increase was most likely due to limited possibilities to sending money [home] through informal channels in the context of the COVID-19 pandemic,” it added.

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