Danube sector Comments Experts comments

"I did not see prosperous countries after choosing the Euro-Asian route"

In the political and economic life of the Republic of Moldova (RM), complex processes continue. On the one hand, certain successes of the government are evident, which partly reflects the stabilization of the economy and the growth of trade, on the other hand - the political events of the summer of 2018 have jeopardized the rule of law and democracy in the country. What is happening in Moldova today and what to expect in the future - in an interview with Viorel KIIRIGOY, Director of the Department of Economic Research of the Institute for Development and Social Initiatives "VIITORUL".

- Recently, the Republic of Moldova has demonstrated a certain growth in the economy, which in many respects even more than in a number of other post-Soviet countries. Woerel, what is your assessment of today's economic situation in Moldova?

- I would look at all these calculations and indicators more closely. At 2013-2014, when we had elections and when Moldova signed an association agreement, we had strange phenomena in the political plane and in the economy. The key issue here was the outflow of a billion dollars from the banking system of the country, which had an impact on the development of the economy for the next two to three years. That growth in trade, which was visible until 2014, stopped, and, in principle, we were even in the least few years. Today, in the 2017, Moldova has caught up with the lost, and the trade is really good growth.

Our exports have become more dynamic. Plus, the companies began to promote their products to the market of European countries and other markets. In this, I think, qualitatively new phenomena, which have very large pros to the economy in the future. In addition, if up to 2015-2016's four cities - Chisinau, Beltsy, Ungheni and Soroki - were attractive to investors, the interest of the district centers is now visible. This is evident in Straseni, Orgievo, Comrat and other cities that already host large investors.

- And this is mostly someone? Romanian, European, Ukrainian investors?

- There are both European and Asian enterprises.

- And what has served to a greater extent the reason of investment attractiveness?

- Firstly, improvement of the investment climate, and secondly, a certain destruction of the three myths about the Republic of Moldova, the fact that Moldova has a unique climate, a very cheap and skilled labor force, and a fertile soil. These myths have disappeared, and reality has shown that it is necessary to create conditions for doing business more attractive than in other countries. In addition, the problem with personnel is as acute as in Ukraine and Romania. There is a large outflow of labor. And most importantly - young qualified specialists. But it should be noted that there is already a reverse effect. Many of those who left the first wave of migration began to return home.

- If we talk about migration, how can you describe it with regard to the Republic of Moldova?

- It is mainly labor migration, connected with the opportunity to make money abroad and go back. Although, of course, a certain part remains and abroad, emigrating finally. Many return with their ideas, their experiences, which are unique to the locality from which they left. And plus, against the background of this, there are very interesting little companies that, I believe, have a great prospect of becoming good companies in the future.

- How positive was the signing of the Association Agreement for the Republic of Moldova?

- An uneasy question. Of course, there are some successes. For example, as 2018, 68% of Moldovan exports are attributed to the European Union countries, while the CIS countries account for only 16%. Exports from the left bank of the Dniester (Transnistrian region) to Romania, Poland and Ukraine exceed exports to Russia. In the case of Ukraine, your country exports a lot to Moldova and very few from the Republic of Moldova. The number of exporting companies has increased, quality changes in industry, agriculture and services sectors have taken place. There have been positive changes in the harmonization of legislation, the build-up of the institutional capacity of public institutions.

However, to say that we have made significant changes, for example in the manufacturing sector, it is very controversial. Today, the situation is not very different from the one before the agreement was signed. After 2014 the year has been stagnant for two years, and only a year ago there was a certain increase. This shows that it is necessary to improve the qualitative component in this sector. But here you need to invest a lot of resources. We need very good companies, new products, new services. And most importantly, they should be competitive not only in our market. I consider Moldova a "training ground" for their own companies, where they can distinguish where they can learn to compete with other companies.

- What is the role in the trade balance of Transnistria? After all, as you know, Tiraspol conducts all economic activity with the world through Chisinau?

- In Transnistria, too, there are processes that show that they are to some extent involved in the process of European integration. For example, if you take trade and export, Ukraine absorbs twice as much goods from this region as Russia. Similarly, the share of exports to Romania is 16,9%, and in Russia - only 10%. At the same time, there is a very difficult situation - the business is not developed, there are no economic reforms, the monopoly of one company "Sheriff", etc.

- Many speak about the possibility of federalization of the Republic of Moldova. How realistic is it?

- Federalization is a false way. Here you need to be very careful about solving many of the problems involved. If there was a wish in Chisinau and in Tiraspol, then all this situation would have been solved for a long time. Secondly, there are very large interests here, and mostly economic ones. This is a "gray zone" through which smuggling is taking place. There is a lot of dirty money not only from Moldova but also from other countries.

- How was the opening of the common Ukrainian-Moldovan border crossing points to the development of relations between the countries?

- It had to be done for a long time. Because the uncontrolled border between Ukraine and Moldova can be considered an open window for various phenomena that are reflected in the economy and in the normal life of the people of the Transnistrian region. It is difficult to say in figures and economic indicators how much the situation has changed. But obviously there will be a positive result. The joint control of the movement of goods and people through points of entry between Moldova and Ukraine should become a normal phenomenon for the development of good-neighborly relations.

- At the beginning of the 2018 year in the Republic of Moldova, regular parliamentary elections will take place. What are your grades and forecasts? In Ukraine, experts believe that the probability of coming to power of the Party of Socialists of the Republic of Moldova (PSDM), which is close to President I.Dodon and known for his pro-Russian views, is very high. What do you think of what to expect?

- Firstly, the opinion of I.Dodon and his party is not the opinion of the whole of Moldova, it is not the opinion of most Moldovans.

Secondly, those decisions that are adopted today by the authorities concerning our parliamentary elections should not be an example for Ukraine. Now in the Republic of Moldova a number of precedents have been created: with the elections of the mayor of Chisinau, the lack of proper reaction of the authorities to the discontent of the people, etc. And they are far from normal perception. All politicians must be adherents of democratic values ​​and take into account the will of the people or the will of the citizens of the country.

Thirdly, it is necessary to create normal conditions for all parties involved in these elections. No need to make changes to the laws, whatever they were, in the last year before the elections.

Now with regard to the elections. Today they talk about a lot of scenarios for the further development of the situation. In particular, a significant percentage will be taken by the PSBM, which will have to form the majority with other parties that have passed to parliament - the Democracy, the Platform of Dignity and Truth Parties and "Action and Solidarity" Parties. This, most likely, will not happen and will create different, including unexpected combinations. In fact, anything can be anything. The situation will change from day to day.

At the same time, I believe that the Democracy has great opportunities to remain in power and to dictate the conditions of the game, even without having the majority in parliament. Unfortunately, other democratic parties today are in an unenviable position for the simple reason that they did not do what they had to do during the reign of the alliance with other parties. If then, in 2014, reforms were made against the background of the signing of the Association Agreement and no billions from the budget were stolen, the situation could well be different. What has happened will have a long-lasting negative impact on the electorate and on the ability of a number of parties to attract people.

And one more point to consider. Now there is a flux of representatives of some parties to others. Therefore, it is possible that after the election complex processes will begin, as a result of which far not the fact that the composition of the parliament will correspond to the results of the election ...

- How much is the risk that Moldova after the election may become more pro-Russian and change the course on European integration to deepen Eurasian cooperation?

- There are always risks. However, I do not know that one of the most influential Moldovan politicians today can say clearly that "yes, the Eurasian path is the shortest and most appropriate for the development and prosperity of Moldova." I did not see the prosperous countries, where, after choosing this path, they became an example for others. This is evident from the example of Armenia and the same Belarus. But at the same time, those countries that do something that are poor, but want to be an example for others, have long been in Europe. In addition, nobody wants to have 7 April 2009 again. For Moldova this will be too painful.

Viorel Kivirga politician, economist, expert of IDIS Center "Viitorul" (Republic of Moldova). He is the author of numerous articles in the field of business, economics, commerce, finance, agriculture and economics. He has participated in many social and economic projects both in Moldova and abroad. Author of the concept of subsidizing agriculture in the Republic of Moldova.

Asked by Anton MICHENKO