Category Archives: European Union

High-Level Corruption Threatens Moldova’s European Aspirations

Every April 7, Moldovans take stock of the progress the country has made since the youth protests of April 2009, which popularly became known as the “Twitter Revolution.” Nine years ago, this civil unrest led to the demise of Communist Party rule and ushered in a coalition of pro-European parties into power. However, hopes for a more democratic and accountable government not only failed to materialize, and many perpetrators of the brutal police crackdown in April 2009 have since been promoted to key state positions by the now ruling Democratic Party (Anticoruptie.md, April 7, 2017). This sense of impunity, coupled with poor economic conditions domestically, discourages young Moldovans from investing any hope in their country’s future. According to the latest poll by the International Republican Institute, 76 percent of respondents do not think that young people have a “good future in Moldova,” while 96 percent said “corruption is a big or very big issue” in the country (Iri.org, March 29, 2018). A recent joint report by the European External Action Service and the European Commission stated that “corruption still remains widespread, and independence of justice, law enforcement as well as national anti-corruption authorities need substantial improvement” (Europa.eu, April 5). Thus, endemic corruption and democratic backsliding not only undermine Moldova’s European aspirations, but also create fertile ground for political instability and civil unrest, this time against a nominally pro-European government.

The same European Union report on Moldova’s record of implementing the Association Agreement with the EU recalls that the change of the electoral system in July 2017 went against the recommendation of the Council of Europe’s Venice Commission and the Office for Democratic Institutions and Human Rights of the Organization for Security and Cooperation in Europe (OSCE). European democracy watchdogs have repeatedly warned Moldova not to introduce the mixed electoral system, because it is likely to exacerbate the country’s corruption problem by allowing wealthy businesspeople to influence elections in single-member districts (Venice.coe.int, March 19; see EDM, January 10). This concern is a major reason why the EU is withholding 100 million euros ($124 million) in macro-financial assistance, earmarked for Moldova last year. According to Vice Chair of the European Parliament Committee on Budgets Siegfried Muresan, EU funds would have arrived already had it not been for the controversial change to the electoral system (Europalibera.org, February 1). On a recent visit to Moldova, Muresan emphasized that at least three or four of the ten EU conditions for the first tranche (30 million euros) have not been met (Adevarul.roCotidianul.md, April 6). Indeed the EU-Moldova Memorandum of Understanding sets clear deliverables in terms of public-sector governance, the fight against corruption and money laundering, energy-sector reforms, etc., but it also demands respect for effective democratic mechanisms, including a multi-party parliamentary system and the rule of law (Europa.eu, November 23, 2017). The latter is much more difficult to achieve, and given how the investigation into the billion dollar bank fraud is going (see below), the government appears to be barely trying.

One billion dollars (12 percent of GDP) was siphoned off from three Moldovan banks prior to the 2014 parliamentary elections. “The theft of the century,” as it has come to be known, is a litmus test for the Moldovan justice system. Moldova’s National Bank hired the New York City–based investigative consultancy Kroll to conduct a financial forensic investigation. Already in its first report, presented in April 2015, Kroll identified controversial businessman Ilan Shor, who controlled the three embattled banks, as the main figure behind the fraud. The consultancy firm’s second report, from December 2017, pointed to 77 companies linked to Shor, who is identified as one of, “if not the only beneficiary” of this highly coordinated fraud (Candu.md, May 4, 2015; Bnm.md, December 21, 2017). Yet, despite being convicted by a lower court to seven and a half years in prison in June 2017, Shor appealed the ruling, and the case has been stalled (Deschide.md, April 2, 2018). Shor remains at large, and in the meantime, he became mayor of a large town, took over the leadership of a political party and is gearing up to enter the parliament. Keen observers of Moldovan politics know that this would be impossible without the protection from the head of Moldova’s ruling Democratic Party, oligarch Vlad Plahotniuc, who used Shor’s depositions to imprison Plahotniuc’s political and business rivals (former prime minister Vlad Filat, oligarch Veaceslav Platon and mogul Chiril Lucinschi) in swift closed trials. The symbiotic relationship between Vlad Plahotniuc and Ilan Shor is the embodiment of high-level corruption that makes the EU increasingly frustrated with Moldova.

Endemic corruption, exacerbated by changes to the electoral system, led to Moldova’s demotion from flawed democracy to a hybrid regime, according to the Economist Intelligence Unit’s Democracy Index (The Economist, February 4). The risks of Moldova becoming synonymous with corruption are manifold, yet two main threats stand out. First, if it continues to only pay lip service to fighting corruption, Moldova will fail to advance its European integration efforts. Second, if the highly disputed mixed electoral system indeed produces a rather unrepresentative outcome in the parliamentary elections scheduled for the end of 2018, the country could plunge into another cycle of political instability, which could be exploited by foreign actors such as Russia. With all that in mind, it is nonetheless becoming apparent that the main fault-line in the Moldovan political debate is less of an East-West divide, but rather rivalry between those defending democracy and good governance and those content with clientelism and corruption. Both the nominally pro-EU oligarch Vlad Plahotniuc and the drudgingly pro-Russian President Igor Dodon are, in fact, progenies of Communist Party leader Vladimir Voronin’s regime, which Moldova’s millennial generation rose up against in April 2009, only to grow disheartened a decade later.

 

Note: This article was written for the Washington based Jamestown Foundation and the original can be accessed here.

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Moldova’s Civil Society under Attack

Alongside Georgia and Ukraine, Moldova has one of the most liberal and vibrant civil societies in the post-Soviet space. Just remember the so-called “Twitter Revolution” in April 2009. The revolution, which spelt the beginning of the end for Vladimir Voronin’s Communist Party, indicated the strength and capacity for mobilisation of Moldova’s civil society groups. But almost a decade later, the country’s non-governmental sector finds itself under increasing pressure from the government.

Much like Moldova’s Communist Party did during the 2000s, the country’s current ruling establishment, first and foremost the Democratic Party, coopts the church, divides trade unions and de-legitimises prominent civil society leaders by labeling them agents of the opposition. Things took a turn for the worse in June, when the Ministry of Justice proposed adding several controversial provisions to a draft law on non-commercial organisations. These proposed amendments contain stronger regulations that would restrict the right to freedom of association and the independence of non-governmental organisations.

One step forward, two steps back

Moldova is turning back the clock on the moderate success it has achieved since 2009. After the revolution, many prominent NGO leaders migrated to politics, where they were coopted by the ruling centre-right political parties. On the one hand, this resulted in a short-term synergy effect that gave some credibility to their political promises of better governance. However, it also resulted in the loss of valuable human capital, leaving many organisations weaker and more lenient towards the government. Self-censorship increasingly became an issue for the third sector given that the government, at least on paper, shared many of the goals promoted by civil society. It soon became apparent that the handful of mostly upstanding NGO leaders could not possibly change the systemic flaws of the country’s corruption-ridden government apparatus.

By the time the centre-right coalition finally collapsed in 2015, most of Moldova’s civic-leaders-turned-politicians had already been discarded by the system as foreign objects, or they had chosen to return to civil society deeply disillusioned with public office. Not only did prominent opinion leaders refuse to serve as political props for the Democratic Party-led government, but many vocally opposed the growing concentration of power in the hands of Moldova’s oligarch-in-chief Vlad Plahotniuc, who took over the leadership of the Democratic Party in December 2016.

All of Moldova’s major civic protests over the last few years, whether against the billion dollar theft or changes to the electoral system, have been supported by opposition parties. That’s normal in a democratic society. But that kind of society is becoming ever-more fragile under the increasingly anti-democratic Plahotniuc controlled government. It’s a state of affairs seen as illegitimate by many Moldovans, given that the Democratic Party only won 19 seats in the 2014 elections, but now controls over 50 seats and a parliamentary majority after orchestrating what has been in effect a hostile takeover of two other factions – the Liberal Democratic Party and the Party of Communists.

So far, the remnants of the parliamentary opposition continue to organise against these attacks on democracy, alongside prominent leaders from the NGO sector. Their cooperation has stymied the Democrats’ ability to gain ground in the polls (the party has got stuck under the six percent parliamentary threshold, despite its enormous financial and administrative resources.) Attempts to silence the NGO sector may yet backfire, as the move unmasks, once again, the nominally pro-European Democratic Party’s true anti-democratic colours. After all, the controversial NGO bill goes against Moldova’s commitments under the Association Agreement with the European Union.

Sounds like “foreign agents”

Before the controversial provisions were introduced by the Ministry of Justice, Moldova’s draft NGO law had been viewed as a promising piece of legislation developed in close cooperation with prominent national NGOs and international partners. Yet the changes put forward by the government would force NGOs that receive foreign funding and participate in what is hazily defined as “political activities” to publish quarterly and annual financial reports. They’d also have to disclose the origin and use of their funding, report specifically on expenses towards their “political activities”, and disclose the income of their staff and board members. The parallels with Russia’s controversial 2012 law “on foreign agents” are unmissable.

As about 90% of NGOs receive some sort of foreign assistance and most engage in advocacy in one field or another, this undue burden, coupled with severe penalties for non-compliance, creates a straightjacket limiting NGO independence. Ironically, apart from fines and potential shutdown, NGOs also risk being excluded from the public funding mechanism that allows taxpayers to donate two percent of their taxes to NGOs — a measure intended to reduce reliance on foreign funding, and regarded as a major achievement by domestic stakeholders and international partners alike. This begs the question as to why the Democratic Party would needlessly antagonise civil society and the European Union while it has apparently burned all bridged with Russia? There are at least three possible answers.

The official government position is that the new law would better regulate the political activity of NGOs by putting them on the same equally rigorous footing as political parties when it comes to funding political campaigns. Apologists cynically present the bill as a liberal measure that would allow NGOs to openly pursue political causes, when in fact it does the exact opposite. Moldovan civil society already abides by strict transparency requirements as demanded by law, as well as donor-driven accountability rules. It is rather the government’s vague and one-sided interpretation of what may represent “political activity” that raises major concerns, leading 78 of the most prominent national NGOs to call upon the government to renounce the controversial amendments and approve the law as it was initially intended by the multilateral expert working group.

The unofficial government position is that the bill is aimed at curtailing Russian soft power in Moldova amid the escalating diplomatic row between Chișinău and Moscow. In May, Moldova expelled five Russian diplomats and subsequently declared Russian Deputy Prime Minister Dmitry Rogozin persona non grata. The Kremlin’s tools for promoting conservative and imperial ideas, such as the Russian World Foundation, Gorchakov Foundation, Recognition Foundation, Byzantine Club and Izborsk Club (of which president Igor Dodon is a member), are thus presented as potential targets. However, their actual impact is arguably much lower when compared to western-funded NGOs, which represent the backbone of Moldovan civil society.

The Russian threat is more likely a pretext for disciplining western-funded NGOs. These groups are far more vocal in their criticism of the government and therefore present a larger threat to the survival of Plahotniuc’s regime. Oddly enough, even Moldova’s pro-Russian president Igor Dodon agrees with Plahotniuc on this anti-civil society offensive. While on an official visit to Hungary in May, Dodon praised Viktor Orbán’s experience of limiting foreign funding of NGOs. Later in August, Dodon again implied that there was a need to limit foreign funding, pointing to the list of grants awarded by the National Endowment for Democracy in Moldova in 2016.

The mutual agreement between Plahotniuc and Dodon on such a controversial issue is peculiar to say the least, though we have already seen them cooperating on the highly divisive electoral reforms, criticised as undemocratic by the Moldovan opposition, civil society and development partners alike.

Keeping tabs on the troublemakers

A more realistic explanation is that the NGO bill is a smokescreen for deflecting attention from the most controversial piece of legislation in Moldova’s recent political history — the changes to the country’s electoral system. Bringing about the move from a proportional to a mixed electoral system, seen as a desperate attempt by the Democratic Party to hold onto power, has been the biggest test for Plahotniuc’s regime yet. Despite condemnation from the Venice Commission of the Council of Europe, the OSCE Office for Democratic Institutions and Human Rights, the European Union and the United States, the EU still approved €100m in macro-financial assistance to Moldova. These funds were conditional on respect for “effective democratic mechanisms, including a multi-party parliamentary system.” The EU will only disburse the funds after carrying out a formal assessment of the government’s compliance with the purposefully vague conditionality.

The Moldovan government needs these funds not only finance the budget, but to ensure the stability of the ongoing $178.7m funding agreement with the International Monetary Fund. Perhaps most importantly, EU assistance has been traditionally presented by Chișinău as an endorsement of its record. This is precisely why the EU is expected to think very hard before it decides to send another cheque to Plahotniuc.

Realising this predicament, the Democratic Party has purposefully antagonised relations with Russia, hoping to prove its pro-western credentials and make the EU and the US more lenient when it comes to democratic backsliding in Moldova. The NGO bill could serve as a bargaining chip in what appears to be a lose-lose situation for regular citizens. Should the EU fall for this blatant extortion, it will share the blame for the government’s anti-democratic crusade. If Brussels decides to stay true to its values, the country would lose about 25% of its external financial requirements. That said, recent revelations that the ruling party of Europe’s poorest country can afford to spend over one million Euros on foreign lobbying could help EU leaders make this decision.

EU officials must have learnt by now that supporting utterly corrupt elites only discredits the union. The EU should not fall prey to geopolitics, but stand tall for its values and ideals.

Foaia de parcurs a UE pentru cooperarea cu societatea civilă

 

Note: The article was written for OpenDemocracy.net and the original can be accessed here.