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Sunday, March 21, 2010

Moldova: Background and U.S. Policy

Steven Woehrel
Specialist in European Affairs

Although a small country, Moldova has been of interest to U.S. policymakers due to its position between NATO and EU member Romania and strategic Ukraine. In addition, some experts have expressed concern about alleged Russian efforts to extend its hegemony over Moldova through various methods, including a troop presence, manipulation of Moldova's relationship with its breakaway Transnistria region, and energy supplies and other trading links. Moldova's political and economic weakness has made it a source of organized criminal activity of concern to U.S. policymakers, including trafficking in persons. 

From April to September 2009, Moldova was locked in a political crisis. The victory of the ruling Communist party in the April 2009 parliamentary elections sparked protests against alleged electoral fraud. Some demonstrators sacked and looted the parliament building and the offices of the president. A stalemate ensued when the Communists lacked the supermajority in parliament needed to elect a new president. This triggered new parliamentary elections on July 27, 2009. The center-right opposition won the vote, and in September 2009 they formed a new government headed by Prime Minister Vlad Filat. Filat has said that his government is attempting to dismantle the country's negative Communist legacy and build a state ruled by law. The new government has moved quickly to improve relations with Romania and the European Union. Due to continuing inability of the parliament to field the supermajority needed to elect a permanent president (the parliament speaker is currently the acting president), the new government will have to hold another round of parliamentary elections later this year, unless it can change the constitution to eliminate the supermajority provision. 

Moldova is Europe's poorest country, according to the World Bank. Living standards are low for many Moldovans, particularly in rural areas. Remittances from Moldovans working abroad amounted to 31% of the country's Gross Domestic Product in 2008. The global financial crisis has had a negative impact on Moldova. The leu has weakened and remains under pressure. Remittances have dropped, as Moldovan emigrants have lost jobs in other hard-hit countries. Moldova's GDP dropped by 7.3% in 2009, on a year-on-year basis. 

As a self-declared neutral country, Moldova does not seek NATO membership, but participates in NATO's Partnership for Peace (PFP) program. Moldova is currently negotiating an Association Agreement with the European Union (EU), which provides for cooperation in a wide variety of spheres and holds out the possibility of an eventual free trade agreement. Moldova hopes to become a candidate for EU membership, although the EU is unlikely to accept Moldova as a candidate in the foreseeable future, due to Moldova's poverty and the EU's own internal challenges. 

The United States and Moldova have enjoyed good relations since the country's independence in 1991. The United States has supported democracy and free market reform in Moldova. The United States reacted cautiously to the outcome of the April 2009 Moldovan election, saying its view of the vote was "generally positive," but noting some problems. After the July 2009 election, a State Department spokesman noted that international observers reached a similar conclusion. The United States has tried to support the country's fragile sovereignty and territorial integrity by advocating the withdrawal of Russian forces from Moldova and the negotiation of a settlement of the Transnistria issue consistent with Moldova's territorial integrity.

Date of Report: March 11, 2010
Number of Pages: 13
Order Number: RS21981
Price: $29.95

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