Perfect Storm Brewing in Moldova

It has been almost two weeks since Strelet government fell and things are starting to precipitate. It is true that throughout the last few years Moldova has been in a continuous state of managed chaos. Yet, with PLDM out of the picture, bi-polarity came to its natural end, leaving a clear vacuum of power. Democrats are struggling to fill the void, but some degree of rising instability in unavoidable. Regional context is not helping either. Ukraine has been in turmoil for almost two years, while Romania has been in a pressure cooker state, only letting off steam. Elections in Transnistria are another factor of concern. In fact, these elections could have presented an opportunity for Chisinau to increase its leverage had its own house been in order. Economic conditions in Moldova are deteriorating, political protest has been widespread, but all this mounting pressure can potentially trigger a wider social protest, no longer manageable by the political parties, hence the perfect storm metaphor.

Economically, Moldova has been crippled by Russian trade ban, lower agricultural output, as well as a sharp decrease in remittances, not to mention the billion dollar bank scandal and the National Bank response, resulting in a credit crunch. According to Expert-Grup, loans in national currency fell by 37%, in foreign currency by 50%; exports down by 28% and remittances by 47%, compared to the same period of last year.  Not even the currency depreciation seems to have helped exports, but is clearly hurting workers, whose real wage went down. A spike in electricity (37%) and natural gas (15%) is the last straw that could break the camel’s back. Other public services like heating and running water are also guaranteed to go up. All utility prices have been kept low for political considerations going back to Communist rule. Now democrats will have to face the music. It looks awfully convenient that the spike in energy prices happens at a time when there is no government in place, thus, no target for public outrage. Yet, as soon as those bills start coming in, people will revolt since they will simply not be able to incur those costs. Crowds have already gathered in front of the Energy Regulator. More to come.

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Politically, things are going south as well. Democrats might have miscalculated on several counts. First, PLDM is putting up a fight by leaving the coalition, instead of coming into fold as probably expected. Secondly, Liberals and Communists are still not persuaded about the benefits of governing together, though Communists would not mind it at this point. Most importantly, the unexpected fall of Ponta government in Romania allowed president Iohannis to backtrack on the 150 mil EUR loan promised by Ponta to his fellow ‘social’-Democrats in Chisinau. Democrats appear to have a terribly simple plan: break PLDM apart, make Leanca PM again and keep the pretence of a pro-European coalition. All that is still likely to happen, however, everybody seems to have realized by now that the Emperor has no clothes. Persuading the public both within and beyond Moldova of the contrary would be a tall order.

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Ultimately, political parties keep making the same mistakes without considering the consequences. Mainly, it is the one man show mentality in all of the political parties, which leads to the party’s demise as soon as the leader is gone. Another destructive factor is parties openly seeking to split other parties. A while ago it was PLDM and PD that competed to break the Communists apart, Socialist being a byproduct of that contest. It was only thanks to Voronin’s incredible resilience that the party is still around.  PLDM were also instrumental in inducing the split among the Liberals. Now it was their turn. Consequently, a number of destabilizing factors have come into play and there are few forces capable of opposing this storm. International community is certainly a powerful player, but not that big of a stakeholder and prone to collective action problem. Thorbjorn Jagland of the Council of Europe tried to stage an intervention three months ago, but to no avail. It is therefore up to the Moldovan civil society to take matters into their own hands. Unfortunately, despite being the key stakeholder, they are plagued by almost insurmountable collective action problem. Weak, divided, penurious and demoralized, there is little hope for civil society to be able to successfully navigate this storm. Thus, alternative ideas abound. Proponents of union with Romania have jumped on the opportunity, rocking the boat even further.  The only sensible solution appears to be early elections, because it would give voters a chance to exercise their authority in a peaceful manner. It is the only legal means to reset the power structure and let out some steam. You never know; maybe we can even get a slightly better deal. If not, it was still worth a try.

PS: For big fans of numbers and graphs, here is  a fresh IRI Poll. Looks like Moldova has hit rock bottom. Too optimistic?

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