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Tuesday, February 12, 2013

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 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 economic 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.

Moldova is governed by the Alliance for European Integration, a center-right coalition of three parties. Prime Minister Vlad Filat has said he is focused on dismantling the country’s Communist legacy and building a state ruled by law. However, conflicts with the Communist opposition and tensions within the coalition appear to have slowed reform efforts. Moldova is Europe’s poorest country, according to the World Bank. Remittances from Moldovans working abroad amounted to 22% of the country’s Gross Domestic Product in 2010. The global financial crisis has had a negative impact on Moldova. Moldova’s currency weakened and remittances dropped, as Moldovan emigrants lost jobs in other hard-hit countries. Moldova’s GDP dropped by 7.3% in 2009, rebounded by 6.9% in 2010 and 6.5% in 2011, only to stall in 2012.

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, including a free trade agreement. Moldova hopes to become a candidate for EU membership, although the EU is unlikely to accept Moldova in the foreseeable future, due to Moldova’s poverty, the EU’s own internal challenges, and possibly also due to concerns that it would set a precedent for the candidacy of other former Soviet states, such as Ukraine.

The United States and Moldova have enjoyed good relations since the country’s independence in 1991. In a visit to Moldova in 2011, Vice President Joseph Biden outlined U.S. policy toward the country. Biden praised Moldova for its commitment to reform and democratic values, including the holding of free and fair elections. He called on Moldova to continue its efforts to create a transparent legal system, to fight corruption, and to end human trafficking. He said that the United States would continue to support a settlement for Transnistria that preserves Moldova's sovereignty and territorial integrity within its internationally recognized borders. He said U.S. aid would help the Moldovan government create policies to spur economic growth and attract foreign investment, train civil society to become more effective advocates, and help improve Moldova's schools.

The 112
th Congress addressed a longstanding Moldovan concern by adopting legislation to grant the country Permanent Normal Trade Relations with the United States (P.L. 112-208).

Date of Report: February 1, 2013
Number of Pages: 13
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