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News 13 Oct 17

Moldova Faces Dilemma After EU Cuts Funds

Moldova risks facing political and economic difficulties, experts say, after the European Union stopped aid to the country, citing a lack of reforms to the judicial system. 

Ana Maria Touma
Moldova's Prime Minister Pavel Filip. Photo: Pavel Filip/Facebook. 

Moldova risks more turmoil before legislative elections scheduled for spring 2018 after the European Union announced that it will not be transferring the final tranche of funds worth 28 million euros to support justice reforms in the country.

The EU delegation in Moldova said on Wednesday that the authorities had not fulfilled the conditions for receiving the money.

"The EU has closely observed the reform process and noted that the Moldovan authorities showed insufficient commitment to reforming the justice sector," the EU delegation to Moldova said on October 11.

The disbursement of other EU funding, including a 100-million-euros aid package, has also been put on hold.

The EU said Moldova needs to respect human rights and the rule of law in order to get the first tranche of the aid package delivered in December.

Last week, Prime Minister Pavel Filip said Moldova would receive no tranches of EU funds this year, but was hopeful that the money would start flowing in 2018, Reuters reported.

However, the Prime Minister insisted that the country had in fact met the conditions to get the 100 million euros of aid from Brussels, blaming “technical reasons” for not having received it in 2017.

“For all those who are speculating on Moldovan not fulfilling conditions, I want to say that we have fulfilled half of the conditions in order to receive the financial aid. We are absolutely on time and there is no problem regarding this,” he told a government meeting on Wednesday.  

He also said the country’s budget could afford the hit because the 2017 budget rectification did not include the EU money.

The EU ambassadors approved the 100 million euros of aid for Moldova on June 15. It was supposed to receive 60 million euros as a loan and another 40 million euros as a grant.

The cash was meant to help Moldova stabilize its economy and implement reforms. However, the European Commission and the EU foreign service said they would monitor the way Moldova implemented the preconditions closely.

The European Parliament adopted a resolution last week demanding strict conditioning of any type of financial support for Moldova, and also proposed suspending any financial assistance until the impact of legislative changes to the electoral system is fully evaluated.

The resolution was adopted after a heated debate and despite opposition from some Socialist MEPs who argued that cutting EU funds for Moldova would boost Russia’s influence. While the country's government is pro-European, the head of state advocates closer ties to Moscow.

Moldova's pro-Russian president, Igor Dodon, met Russian president Vladimir Putin on Monday when he advocate Moldova obtainining observer status at the Russia-led Eurasian Economic Union, which Moscow has established as a regional alternative to the EU. 

A new mixed electoral system was adopted by Moldova's parliament in June with support from both the ruling Democratic Party and the pro-Russian Socialist Party.

However, the Venice Commission has warned that it favours big parties and disadvantages smaller political groups.

Analysts in Chisinau say the EU decision is a consequence of the failure of anti-graft policies in Moldova and was, therefore, predictable.

“This is the bill for all the games played in the justice system, with the prosecutor’s office and other justice authorities, in 2017. There is an increasing gap between Moldova and the rule of law," Igor Munteanu, head of the Institute for Development and Social Initiatives Viitorul, said.

However, Moldova’s Ministry of Justice said on Thursday that the country had made significant progress in the area of justice reform.

It had modified the criminal code to criminalize fraud and had also criminalized political influence over judges in the Supreme Court.

“The Ministry ... will continue efforts to modernize the justice system, including with help from European partners. This support is still coming in many forms, even if the budget allocation was stopped for the moment,” the ministry's press release read.

Europe's poorest country has had three governments since 2015, after the disappearance of $1 billion from the banking system sent the country into a political and economic crisis. Legislative elections are due in spring 2018. 

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