diary part two

Moldova

Driven by desperation

May 15th 2007
From Economist.com

Our correspondent dissects the Moldovan government

Monday | Tuesday

Tuesday

MOLDOVA is run by Vladimir Voronin, the only serving head of state in the world to have won a contested election on a communist ticket. His views have changed a lot from 2001, when he said he would make his country the “Cuba of eastern Europe”. Now he is pro-market and pro-European Union. He’s pro-democracy too, in theory. But the justice system is dismal and the security services powerful. The authorities treat journalists they don’t like with silly vindictiveness. The opposition finds it hard to get on telly: in short, it’s a typical bureaucratic and fairly authoritarian presidential republic, a bit like Ukraine used to be before the “Orange Revolution”.

The story the Moldovans want to tell is of their conversion to radical economic reform. It is certainly needed. Moldova is the poorest country in post-communist Europe; 47% of the population lives below the poverty line. At least 25% of the working age population has emigrated. Their remittances keep the place going.

Now Mr Voronin has announced an amnesty for illegal capital and unpaid taxes, and a sweeping tax cut for business. The idea, ministers and officials say with unconvincing confidence, is to make Moldova like Estonia.

That is a bit like announcing that Louisiana will in future be run like Switzerland. Estonia’s post-communist trajectory is the most startling success story in the region. For much of the 1990s reform went at warp speed there. The civil service is hi-tech, anglophone, instinctively open in its approach, informal, liberal-minded and honest. The country also benefits from exceptionally close contacts with neighbouring Finland

Dealing with the Moldovan government does not evoke memories of Estonia. Soldiers patrol the corridors in Soviet-style uniforms, saluting as minor bureaucrats go by. According to people who deal with it, the bureaucracy is old-fashioned and often corrupt. Ministries are run as Soviet-style hierarchies, where connections and status matter far more than good ideas, and everyone guards decision-making power and information jealously. No neighbouring country plays Finland’s role. Most outsiders that come to Moldova from neighbouring countries offer bribes, not advice.

The economics minister wants to make the country a “logistics hub” for the Black sea region. Not a bad idea—but it will be hard to do that without allowing foreigners to buy land freely, or to compete with obese sacred cows such as the national airline.

Yet things are changing. People now move from Transdniestria to work in Chisinau. It used to be the other way round: in Soviet times Transdniestria was industrialised, whereas Moldova specialised in low-value-added agricultural produce. Moldova is even facing a huge influx of cash over the next few years: $1.2bn was pledged at a donor conference last year.

Every big international outfit seems to have an office in Chisinau. Some are run by inspirational people. Others seem to have been sent to Moldova as a punishment, or at the fag-end of their careers. Some foreign missions are run by locals of questionable outlook.

Given Moldova’s exceptionally weak institutions, it is likely that some donated money will be stolen. Quite a lot will merely be wasted. Some will never be allocated at all, because Moldovan officialdom can’t get its act together. But some may actually do good.