[Joint House and Senate Hearing, 116 Congress]
[From the U.S. Government Publishing Office]


116th Congress }                            Printed for the use of the                       
                        
1st Session   }      Commission on Security and Cooperation in Europe
                                             
======================================================================
                         Why Moldova Matters
                         
                         

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]




                            June 4, 2019

                           Briefing of the
          Commission on Security and Cooperation in Europe
------------------------------------------------------------------------
                         Washington: 2019


              Commission on Security and Cooperation in Europe
                      234 Ford House Office Building
                           Washington, DC 20515
                              202-225-1901
                            [email protected]
                            http://www.csce.gov
                              @HelsinkiComm


                    Legislative Branch Commissioners
                     
     
              HOUSE				SENATE

ALCEE L.HASTINGS, Florida       	ROGER WICKER, Mississippi,
          Chairman			  Co-Chairman
JOE WILSON, South Carolina		BENJAMIN L. CARDIN. Maryland
ROBERT B. ADERHOLT, Alabama		JOHN BOOZMAN, Arkansas
EMANUEL CLEAVER II, Missouri		CORY GARDNER, Colorado
STEVE COHEN, Tennessee			MARCO RUBIO, Florida
BRIAN FITZPATRICK, Pennsylvania		JEANNE SHAHEEN, New Hampshire
RICHARD HUDSON, North Carolina		THOM TILLIS, North Carolina
GWEN MOORE, Wisconsin		        TOM UDALL, New Mexico
MARC VEASEY, Texas			SHELDON WHITEHOUSE, Rhode Island                   
          
                  Executive Branch Commissioners
               
               
                    DEPARTMENT OF STATE
                   DEPARTMENT OF DEFENSE
                  DEPARTMENT OF COMMERCE
                            [II]  


    The Helsinki process, formally titled the Conference on Security 
and Cooperation in Europe, traces its origin to the signing of the 
Helsinki Final Act in Finland on August 1, 1975, by the leaders of 33 
European countries, the United States and Canada. As of January 1, 
1995, the Helsinki process was renamed the Organization for Security 
and Cooperation in Europe (OSCE). The membership of the OSCE has 
expanded to 56 participating States, reflecting the breakup of the 
Soviet Union, Czechoslovakia, and Yugoslavia.
    The OSCE Secretariat is in Vienna, Austria, where weekly meetings 
of the participating States' permanent representatives are held. In 
addition, specialized seminars and meetings are convened in various 
locations. Periodic consultations are held among Senior Officials, 
Ministers and Heads of State or Government.
    Although the OSCE continues to engage in standard setting in the 
fields of military security, economic and environmental cooperation, 
and human rights and humanitarian concerns, the Organization is 
primarily focused on initiatives designed to prevent, manage and 
resolve conflict within and among the participating States. The 
Organization deploys numerous missions and field activities located in 
Southeastern and Eastern Europe, the Caucasus, and Central Asia. The 
website of the OSCE is: .


    The Commission on Security and Cooperation in Europe, also known as 
the Helsinki Commission, is a U.S. Government agency created in 1976 to 
monitor and encourage compliance by the participating States with their 
OSCE commitments, with a particular emphasis on human rights.
    The Commission consists of nine members from the United States 
Senate, nine members from the House of Representatives, and one member 
each from the Departments of State, Defense and Commerce. The positions 
of Chair and Co-Chair rotate between the Senate and House every two 
years, when a new Congress convenes. A professional staff assists the 
Commissioners in their work.
    In fulfilling its mandate, the Commission gathers and disseminates 
relevant information to the U.S. Congress and the public by convening 
hearings, issuing reports that reflect the views of Members of the 
Commission and/or its staff, and providing details about the activities 
of the Helsinki process and developments in OSCE participating States.
    The Commission also contributes to the formulation and execution of 
U.S. policy regarding the OSCE, including through Member and staff 
participation on U.S. Delegations to OSCE meetings. Members of the 
Commission have regular contact with parliamentarians, government 
officials, representatives of non-governmental organizations, and 
private individuals from participating States. The website of the 
Commission is: .


                          Why Moldova Matters


                              June 4, 2019


                                                                    Page
                              PARTICIPANTS

    Rachel Bauman, Policy Advisor, Commission on Security and 
Cooperation in Europe                                                  1

    Dr. Cory Welt, Specialist in European Affairs, Congressional 
Research Service                                                       2

    Jamie Kirchick, Journalist and Visiting Fellow, Brookings 
Institution                                                            5

    H.E. Cristina Balan, Ambassador of the Republic of Moldova to the 
United States                                                          7

 
                         Why Moldova Matters
                         
                              ----------                              

                              June 4, 2019


    The briefing was held at 10:09 a.m. in Room 121, Cannon House 
Office Building, Washington, DC, Rachel Bauman, Policy Advisor, 
Commission on Security and Cooperation in Europe, presiding.
    Panelists present: Rachel Bauman, Policy Advisor, Commission on 
Security and Cooperation in Europe; Dr. Cory Welt, Specialist in 
European Affairs, Congressional Research Service; Jamie Kirchick, 
Journalist and Visiting Fellow, Brookings Institution; and H.E. 
Cristina Balan, Ambassador of the Republic of Moldova to the United 
States.

    Ms. Bauman. Hi. Thank you, everyone, for joining us this morning, 
and everyone watching on Facebook Live as well.
    My name is Rachel Bauman. I'll be moderating the discussion today. 
I serve as policy advisor for Russia, Ukraine, Belarus, Moldova and the 
Baltics on the Commission on Security and Cooperation in Europe, also 
known as the Helsinki Commission. We're an independent agency of the 
Federal Government charged with monitoring compliance with the Helsinki 
Accords and advancing comprehensive security through promotion of human 
rights, democracy, and economic, environmental, and military 
cooperation in 57 countries.
    Moldova, the topic of our discussion today, is a small landlocked 
country between Ukraine and Romania which is typically viewed as a 
state torn between Russia and the West. It's worth exploring, however--
and today we will explore--whether Moldova's problems are more internal 
or external. The country remains in a precarious position since its 
February 24th parliamentary elections.
    Today we'll look at Moldova in a regional context, as well as 
investigating some of the post-election internal politics. Will 
Moldova's deeply divided parliament be able to form a governing 
coalition? What influence will Moldova's oligarch Vlad Plahotniuc have 
on the process of forming a government? And is there real political 
will in Moldova, especially right now after elections, to become a 
full-fledged member of the EU? And finally, what's going on in the 
breakaway Russian region of Transnistria?
    To speak to some of these questions we have today three 
distinguished panelists. And their full biographies can be found in 
your folders, so I'll just introduce them briefly. Speaking first will 
be Dr. Cory Welt, specialist in European affairs at the Congressional 
Research Service. Next will be Jamie Kirchick, a journalist and 
visiting fellow at the Brookings Institution. And finally, we have Her 
Excellency Cristina Balan, Ambassador of the Republic of Moldova to the 
United States.
    We're going to start by having each of the panelists make a 
statement, and then we'll get into some discussion and audience 
question and answer. Additionally, if you're tweeting, our Twitter 
handle is @HelsinkiComm; that's at Helsinki C-O-M-M, if you want to 
tweet about the event.
    So without further ado, I will ask Cory to come up here and give a 
statement.
    Dr. Welt. Good morning. Thank you to Rachel and the Helsinki 
Commission for convening this briefing and for including me in it.
    I am going to sidestep the question of why Moldova matters in my 
opening remarks and leave that for my two esteemed panelists. Instead, 
what I'm going to do is set some context for you, focus on the state of 
play and the post-election talks on government formation, possible 
outcomes of those talks, and potential implications for Moldova and its 
foreign policy orientation. But first I'm going to give you a few words 
on U.S.-Moldova relations, since I am here in my capacity as an analyst 
for the Congressional Research Service.
    The U.S. Government, including Congress, has generally considered 
Moldova as one of three states, together with Georgia and Ukraine, who 
are seeking greater integration with the West while coping with 
separatist territories--separatist conflicts that have been fostered by 
Russia. Now, this is generally an understandable frame. Among post-
Soviet states, Moldova is considered to be relatively advanced in terms 
of its democratic freedoms, just behind Ukraine and Georgia, and akin 
to neighboring states in the Balkans such as Macedonia. Moldova also, 
among post-Soviet states, has a unique relationship to the European 
Union. At least half a million Moldovans, probably more, hold Romanian 
citizenship. Romanian is considered an ethnic kin of Moldovan. And so 
about 15 percent, at least, of Moldovans are also citizens of the 
European Union.
    Moldova has concluded free trade and visa agreements with the EU, 
and the EU has been a major aid provider for Moldova, although it has 
made a new assistance package conditional on respect for democratic 
mechanisms and implementation of specified reforms. Moldova is also 
grappling, now for almost 30 years, with the territorial conflict in 
the predominantly Russian-speaking region of Transnistria, which 
seceded from Moldova in the early 1990s under Moscow's protection. Some 
progress toward resolving certain elements of this conflict has taken 
place in recent years. It's an issue I'll leave for the ambassador, or 
we can take it up again in Q&A. It is important to remember, however, 
that Moldova, unlike Georgia and Ukraine, is officially a neutral state 
and it does not seek formally NATO membership.
    In terms of U.S.-Moldova relations, U.S. foreign aid to Moldova has 
increased substantially in recent years, particularly after Russia's 
2014 invasion of Ukraine. Moldova currently is the third-largest U.S. 
aid recipient in the Europe and Eurasia region after Ukraine and 
Georgia. And in terms of Congress' policy toward Moldova, in the last 
Congress resolutions were introduced in both the House and the Senate 
supporting Moldova's sovereignty and territorial integrity and calling 
for an enhanced U.S.-Moldova partnership and more focused U.S. 
assistance for domestic reform.
    Now I'd like to offer a few remarks on the current state of play in 
Moldovan politics, possible outcomes of the current post-electoral 
talks, and implications. So according to international and domestic 
observers, Moldova's recent parliamentary elections were democratic but 
somewhat flawed. And these flaws included allegations of vote buying 
and the misuse of state resources. Nonetheless, the outcome of the 
elections appears to reflect longstanding domestic divisions within 
Moldova, between what you might characterize as a European-leaning 
majority and a Russian-leaning minority.
    It's difficult to precisely parse out what percentage, and I'm 
going to refrain from trying to do so, but in terms of party 
representation the European-leaning majority itself was split in the 
last elections electorally between supporters of the establishment 
ruling party, the PDM, the Democratic Party of Moldova, and supporters 
of a party that has characterized itself as a more firmly pro-Western 
reform party or alliance, called ACUM, or Now. The Russian-leaning 
minority in Moldova is represented by the Socialist Party, which is the 
party of Moldova's president Igor Dodon.
    With over 3 months of negotiations and discussions and some 
political posturing over the last few months, no government has been 
formed yet, and time is running out. The president is able to call 
elections very soon, within a matter of days or weeks if I'm not 
mistaken. And so the talks have in fact intensified in recent days, 
including visits to Chisinau of representatives of the EU, the United 
States, and Russia. In addition to the three main parties that are 
involved in these talks a fourth party is in the mix, the Sor Party, 
which is named after and run by a wealthy businessman and regional 
mayor, Ilan Shor, who is providing an interesting element in the 
postelectoral talks, as he had been indicted for bank fraud and is 
currently appealing a 7-year prison sentence--actually sentenced for 
bank fraud.
    The deadlock that the parties in Moldova are experiencing is not a 
new feature in Moldovan politics. In 2009-2010, it took three elections 
before a government could be formed. But it's also important to keep in 
mind that this deadlock is not unique in today's European context. 
Recent elections in several nearby countries, in the Baltic States and 
Israel last week, have led to a highly fragmented political landscape 
that has made it difficult to form governments. And Israel last week 
called for new elections.
    The way I see it, there's five--at least five potential outcomes to 
the discussions that are taking place in Moldova today. Let me briefly 
go over them. Two of those outcomes, in my mind, appear the most 
likely. It's difficult to predict which one has the upper hand. One 
outcome, which is the one most folks are talking about now, is the 
possibility of snap elections. It's the logical outcome when the 
government--when the parties can't come to an agreement on a coalition. 
The main question about snap elections is to what end would these 
elections be held.
    It is difficult in the current political context to see how 
politics will shift substantially and lead to a different kind of 
outcome within a matter of months. And in several months' time Moldova 
could still be in the same situation as it is now, lacking a 
government. Yesterday an EU representative in Moldova suggested that 
snap elections could lead to other problems, including the possibility 
that the IMF might suspend its financial program with Moldova, leading 
also to difficulties in terms of renewing EU assistance. But snap 
elections are a very real possibility.
    A second likely outcome is a coalition of what I call the parties 
in power--a coalition between the Socialist Party of the president and 
the PDM, the ruling party. This is a coalition that many expected would 
emerge out of the elections. And it would arguably serve the immediate 
political interests of both parties and reflect a recent history that 
they've had of tactical cooperation. Such a coalition, however, risks 
damaging the PDM's standing with the West, as there would be many 
questions as to its interest and readiness to ally and turn into 
government with a party that is avowedly, openly pro-Russia.
    Three other possible outcomes--one that is less-often discussed, 
but I think is still a possibility that needs to be considered, is that 
the PDM will repeat the steps that it took to come to power last time 
around. The PDM came to power in 2016 not through elections, but 
instead it cobbled together a coalition within parliament after the 
previous government collapsed by peeling off MPs from other parties. It 
could conceivably do so again, even though it's entering on this post-
electoral timeframe in a somewhat weaker position.
    A fourth possibility is what I would consider to be a quote/unquote 
``pro-Western coalition.'' That would be a coalition between the ruling 
PDM and the opposition ACUM alliance. From the West's point of view, a 
PDM-ACUM alliance might make a lot of sense, two of the avowedly pro-
Western parties overcoming their differences, uniting to continue to 
further promote Moldova's European integration. This alliance, however, 
has not been politically feasible to date. The PDM has expressed a 
willingness to ally with ACUM, but ACUM views the PDM as corrupt. ACUM 
leaders even implied before elections that the PDM or some of its 
operatives may have been guilty of poisoning them. It's not an 
allegation that I can affirm or deny, of course. And ACUM also feels 
that allying with the PDM would require it make a 180-degree turn in 
terms of its electoral promises and its commitment to fighting 
corruption and overthrowing the existing government.
    The last possibility is what I would consider to be a kind of grand 
east-west coalition between the Socialists and ACUM. Again, the 
Socialists, like the PDM, have expressed readiness to form a coalition 
with ACUM, but ACUM has rejected such a coalition. Unlike with the PDM, 
ACUM has expressed interest in cooperating with the Socialists, but 
they propose a very specific form of cooperation, some form of minority 
or interim government which would be led by ACUM, in which ACUM and the 
Socialists cooperate to the change the election rules, carry out what 
they call the de-oligarchization--I practiced that word--[laughter]--of 
Moldovan politics which in practice, to ACUM, means removing the PDM 
from the political scene, and removing the influence of PDM party 
leader Vlad Plahotniuc. And then hold early elections in which the 
Socialists and the ACUM would be the main contenders. The Socialists, 
however, have expressed little interest in this.
    So five--at least five different possibilities. And I invite you to 
come up with more. And none of them, except early elections, are really 
being talked about actively publicly right now. It's difficult to know 
what's going on behind the scenes. But given the kind of pressure that 
the parties face and the message they've received from the outside, I 
wouldn't be surprised if some kind of government is formed in the 
coming days.
    And finally, a few comments on the international implications. It's 
a very complex postelectoral process, but the implications aren't just 
domestic. Many consider that they have implications for Moldova's 
geopolitical trajectory and, in particular, Russia's influence in the 
country and the region. The main question is what happens if the 
Socialists enter the government. The Socialists are an offshoot of 
Moldova's old Communist Party, which governed Moldova in the 2000s. But 
the Socialists are even closer to Russia than the Communists were in 
their later years. Socialist leadership and MPs even visited Moscow 
during this period of negotiations for consultations.
    If the Socialists were to enter into a coalition government, it's 
logical to expect that Moldova would risk tilting more toward Russia. 
Two caveats, though, to keep in mind. First, that kind of tilt could 
depend on how much resistance the Socialists would encounter from their 
putative coalition partner, be it the PDM or ACUM. The ACUM in 
particular would try to present a much firmer balance against any 
excessive shift toward Russia. And second, it could depend on what the 
positions the Socialists would receive in government. This is a 
challenge that other countries have faced in Europe, in which parties 
that were considered to be Russia-friendly were taking positions in the 
security and intelligence establishments. If that were to happen in 
Moldova, that might be a greater cause of concern.
    If the Socialists are excluded from government, which is a very big 
if--it would require ACUM and the PDM to get over some major 
differences--it might enable Moldova to maintain its pro-Western 
trajectory, but it would be an alliance that could be fraught with 
tension and lead to internal deadlock on reforms, perhaps in some ways 
similar to the kind of politics that had occurred in Ukraine for the 
last several years, when Ukraine was run both by some oligarchic 
interests still and reformist elements.
    The EU and the U.S., to conclude, officially say, and repeatedly 
have said, that they'll accept any coalition that is consistent with 
Moldova's laws, although the EU is on record as saying that it doesn't 
think that somebody implicated in a $1 billion bank fraud, being the 
leader of the Sor Party, ought to be in government. But other than 
that, the message has been that the important thing is for this process 
to culminate in a democratic electoral outcome.
    Thanks.
    Mr. Kirchick. Thank you to the Commission for hosting us today and 
for the important work that you do. Thank you all for coming.
    I was in Moldova recently as a part of a delegation with the 
International Republican Institute to monitor the elections. IRI's one 
of the two party institutes that are part of the National Endowment of 
Democracy to encourage democracy and liberal values abroad. They had a 
long-term observer mission with people who were there for months in 
advance to chart the progress of the electoral campaign. And then they 
had a short-term observer mission with a delegation.
    And we just came for about a week to make sure there was no ballot 
stuffing and what not. And it's important to understand that an 
election can seem perfectly above-board the day of, but there are 
obviously lots of things you have to watch out for both before and 
after. And I would refer you to the report put out by IRI and also the 
OSCE on these matters. \1\ As for what I observed personally the day of 
the election, I didn't see any irregularities.
---------------------------------------------------------------------------
\1\  https://www.iri.org/resource/iri-preliminary-statement-moldovan-
parliamentary-elections; https://www.iri.org/resource/
moldova%E2%80%99s-electoral-reforms-signal-step-forward-echo-iri-
parliamentary-elections-findings; https://www.osce.org/odihr/elections/
moldova/389342
---------------------------------------------------------------------------
    But I would probably say the one disappointment that I witnessed--I 
was in the southern region of Gagauzia, which is an interesting sort of 
ethnic Turkish part of Moldova. I saw in rural areas much less 
resources available in terms of ballot boxes, poll watchers, than there 
were in the sort of regional urban areas or cities. Meaning that there 
were long lines in rural areas, people waiting for hours to vote, 
rather chaotic in some places. Meanwhile, in the largest city that we 
visited, there was literally no one at all waiting in line to enter the 
polling station.
    This is just one anecdotal observation I can give you. It's by no 
means in any way meant to describe the entire electoral process. You 
know, I would agree with what Cory said. If you look at the OSCE 
report, they cite that there were allegations of vote buying, and 
giving of gifts of people to vote certain ways. And you particularly 
heard this with the voters from Transnistria, who were being bused in. 
And I think that was a pretty chaotic process.
    And we received reports, certainly in the run-up to the election we 
had a meeting with Mr. Nastase, who's the leader of the ACUM bloc, who 
had run for mayor in 2018. And his victory was actually invalidated by 
the government. So he was quite angry, understandably, because of that. 
And he was certainly making the case beforehand to us that there were 
lots of irregularities--the use of administrative state resources, the 
sort of typical complaints that you hear in this part of the world. So 
that's something to just keep in mind. But at the end of the day, the 
election, I think it's fair to say, was representative of the popular 
will.
    As to the geopolitical questions here--why does Moldova matter--I 
think it matters because the United States has been committed to a 
policy of a Europe whole, free, and at peace, really since the end of 
the cold war, and consolidating democracy and good government. And 
Moldova is a pretty sore spot. It's the poorest country in Europe. It's 
the site of very high corruption. It's the site of Russian influence. 
It's the site of a lack of territorial integrity. And we've seen now 
that there are three nations in this region--Georgia, Ukraine and 
Moldova--that all have Russian troops stationed on them. And this is 
something that should certainly concern the United States and its 
democratic allies.
    The political situation now seems to be frozen. There seem to be 
three irreconcilable political blocs, that we just heard a pretty fair 
description of them. I mean there is a Socialist Party that is 
basically the kind of, you know, dregs of the former Communist Party, 
very pro-Russian. President Dodon has already been to Moscow several 
times in the past couple months.
    Along with, I believe, every deputy who's a member of the Socialist 
Party has also visited Moscow since the election. Then you have the 
PDM, the Democratic Party, which claim to be pro-Western.
    I'm not really sure what that means. They seem to be more what a 
colleague, a scholar at the University of Pennsylvania, Mitchell 
Orenstein--he refers to Mr. Plahotniuc as a flexible oligarch, who can 
go either way. He doesn't seem particularly committed to Western 
values, I think, in the same way that other leaders, certainly Mr. 
Nastase, are, which brings us to the third party, ACUM, which I think 
is really genuinely a pro-Western party. It's driven by anti-corruption 
which is, I think, just judging by the popular polling that's been done 
by IRI, 49 percent of Moldovans consider corruption to be the major 
issue. And that's, by far, the most important issue in Moldova--
fighting corruption.
    So you have this party which is basically a pro-Russian, post-
Communist Party. You have a party that's controlled by an oligarch, 
who's not even elected to anything. It reminds me of Bidzina 
Ivanishvili, the former prime minister of Georgia, who similarly is not 
elected to any position, yet is the most powerful man in that country. 
And I think that's not really a good sign in terms of the country's 
democratic development and Westward path, when the important, powerful 
person in the country is not elected to anything. That's a bad sign.
    And so it's hard for me to see how this political stalemate gets 
resolved. I would personally think that the most likely one would be 
some sort of alliance between the PDM and the Socialist Party, just 
because the PDM seems to be more opportunistic in this regard. And that 
seems like more of a natural fit than any other potential alliance. I 
also think it is important to look at Moldova as a potentially negative 
example of where Ukraine could go. Ukraine is a much larger country. 
It's one of the largest countries by population in Europe, the largest 
country by landmass in Europe. It's a place that the EU and United 
States have been investing a lot in. I think there are more 
geopolitical considerations in Ukraine than there are in Moldova.
    There's a serious push and pull in Ukraine about joining the EU or 
not, about moving toward NATO. There's actually real NATO cooperation 
there. And I think--you know, looking at Moldova and looking at the 
control of oligarchs in Moldova, I think that that is something that 
those of us who are concerned about Ukraine--if things don't go well in 
Ukraine then they could move in that direction, in having more 
oligarchic control. And I don't think that the Russian goal here is 
necessarily to bring the country back into its fold, to necessarily 
have it join the Eurasian Union and to completely forgo any possibility 
or intent of moving westward. I think it's to create failed states on 
the periphery of Europe, to create countries that are basically, black 
holes of corruption and human trafficking, and drug running, and arms 
dealing, and all that.
    And that is what I fear the direction that Ukraine could be moving 
in. But ultimately, I think we shouldn't sort of obsess or make these 
things out to be more geopolitical than they are.
    And I don't think the average Moldovan who went to the polls in 
February, certainly not the ones that we've talked to--NATO membership 
wasn't the main thing on their mind. Even EU membership I don't think 
was the main thing on their mind. I think just having a decent life.
    I mean, as I said, this is the poorest country. And I was traveling 
out into rural areas, and these places are really poor. I mean, the 
living standards remind one of parts of the Middle East or sub-Saharan 
Africa in some places. So, you know, day-to-day living is the most 
important thing. And I think, What's Putin's game here? Those sorts of 
questions are ultimately not what's driving most Moldovans. What 
American policymakers, I think, should be concerned about is how we can 
help this country progress forward into becoming a more prosperous, 
liberal, democratic country.
    So, thank you.
    Amb. Balan. Dear colleagues, thank you very much for your interest 
in my country, the Republic of Moldova. And thanks a lot to the 
Helsinki Commission for keeping the focus on our region and on all the 
challenges that Moldova is going through.
    It's pretty difficult for a small country like Moldova to be always 
on the radar for the U.S. stakeholders, as the world is on fire right 
now, there are so many events going on in the United States and abroad. 
And of course, what's going on in our country is not as important. But 
it is very important for the 4 million people that are living in my 
country. And it's also important for the region in which we live. As 
you know, Moldova is at the border with a NATO country, with Romania. 
And it is also a member--Romania is a member of the European Union. 
Back in 2014, we signed an Association Agreement with the European 
Union, and we are following a road map of reforms to align our legal 
framework to the European Union's.
    We have been also proving throughout the last years that we are a 
reliable partner and ally to the United States. We have confirmed that 
in many ways. Even though Moldova is a small country, but just to give 
an example, we are supporting the U.S. initiatives in international 
fora, I'd cite just the U.N. We've been supporting several resolutions 
of the United States in the United Nations despite the trends of the 
European Union even.
    We also have demonstrated that we are supporting the Jewish 
community in the Republic of Moldova and worldwide, and we were not 
indifferent to the United States' calls to action by adopting an 
international definition of anti-Semitism. And now we are teaching 
young students in schools and universities about the horrors of the 
Holocaust. And a lot has been done in this respect during the last 
years.
    Also I'd like to mention that Moldova has marked 20 years during 
this year of a special partnership with North Carolina. Thousands of 
citizens from North Carolina have been involved in a variety of social, 
economic, educational, cultural, and military programs in Moldova. And 
our country has enjoyed, of course, the support of a caucus in the 
House of Representatives, co-chaired by David Price and Pete Olson, who 
introduced the resolution in support of our country's independence and 
Western integration last year.
    So this is just a general outline, and then I would not bother you 
with many other details because my distinguished co-panelists have 
pretty accurately described to you the situation in the Republic of 
Moldova. Probably what's most interesting is what is going on in 
Moldova right now. It's been 3 months since we had our general 
elections. A year ago, when I arrived to Washington, D.C. in my 
capacity of an ambassador of the Republic of Moldova, the situation was 
pretty difficult. And while looking to the polls, we were seeing that 
the Socialist Party was enjoying much larger popularity than right now, 
than it proved to be after the elections.
    The polls were showing that the Socialist Party would take about 46 
percent. And that would make their mission pretty easy to form a 
majority coalition and to get Moldova closer to the Russian Federation. 
But after the elections we have seen that the Socialist Party took 35 
seats only in the Parliament. And this is--according to some analysts, 
because they've been promising and not delivering, despite the fact 
that the President Dodon, who is a member of the Socialist Party, is 
traveling on a monthly basis to Russia, if not more often, and having 
pictures with Mr. Putin. And Mr. Putin, according to the polls, is 
still a very popular person in the Republic of Moldova due to the 
multiple TV channels that are directly and freely broadcasting to 
Moldova and showing how great is life in the Russian Federation and how 
great is its leadership.
    So they are falling down because they haven't been delivering. They 
have been promising, the president has limited capacities, and they've 
been promising and not delivering. The Democratic Party, which is the 
ruling party right now, has 30 seats in the Parliament, and the bloc of 
two pro-European parties, ACUM, has 26 seats. And there is the Sor 
Party, which has seven seats in the Parliament, after the elections, 
which have been recognized as free and fair by international parties--
my colleagues already cited allegations, but we are talking about 
official reports.
    After these elections, the parties which ascended in the Parliament 
have been trying to form a coalition. And it's been 3 months now. The 
deadline for forming the coalition is June 9th. Basically, it's the end 
of this week. If the parties will not achieve an understanding, then 
the Parliament will be dissolved, and the president of our country will 
name another date for early elections. And most probably it will be in 
October or November this year.
    What would this mean for Moldova? We'll go through the first 
scenario of early elections. Basically, if you think about the fact 
that we started the year of 2019 with an election campaign, okay, so 
everything stopped basically and we had an election campaign. In 
February, we had elections, then 3 months of negotiations. Then if 
there will be no agreement, then, again, we'll have a campaign, then 
again elections, and then again negotiations. Basically 2019 is a lost 
year for Moldova. It's a lost year for our reforms, for our economic 
growth that we have registered throughout the years, and many other 
commitments that Moldova assumed by signing the EU Association 
Agreement.
    And as my colleague also mentioned, the IMF agreement is due. It 
expires in November this year. And I just had recently discussions with 
the IMF mission here. And they said: We need a government--fully any 
potential government to be able to discuss the problem. If there will 
be no government, then of course there will be no IMF program.
    What does it mean for a country like Moldova not to have an IMF 
program? The loans which are coming from IMF are not that big compared 
to the total amount of loans that we are taking, but it's very 
important for the country rating. If the country rating goes down, it 
means that the interest rates for the other loans go up. It means that 
our economy will be suffering. It means that prices will go up. It 
means that the social crisis will increase. There will be more unhappy 
people. And we already can anticipate how will be the mood if there 
will be early elections.
    Unfortunately, Moldova has been developing not as successfully and 
wasn't as successful as the Baltic States, for example, probably 
because there is more political maturity in the political class. And 
there is more responsibility among the citizens of those countries. 
However, Moldova is striving toward the West. It is, together with 
Ukraine and Georgia, very bold about its aspirations, even though there 
is a considerable part of people--older generation, probably--who are 
still looking with nostalgia toward Russia. It's all right. It's 
something that we have inherited. But the younger generation really 
aspires toward the West.
    The early elections will definitely not do any good to our country. 
And just the fact that we haven't been developing so much, it's also 
because we are in a very tough neighborhood. And all this political 
instability and continuous economic crisis and social crisis, it really 
probably was also facilitated by some of our neighbors which operate 
the best in conditions of instability.
    There are several scenarios, of course, that the current political 
parties might form a coalition. The ACUM bloc is actively trying to 
negotiate with the Socialist Party. On Monday, we had EU Commissioner 
Hahn, who visited Moldova. And he discussed with all the political 
leaders--and he emphasized the fact that the European Union will work 
with whatever coalition, which will be formed according to the law.
    He also drew our attention to the fact that early elections are not 
good for the country. Because of the IMF, but also if there is no IMF 
program then the European Union cannot provide macrofinancial 
assistance, which is also very important for Moldova. And he also 
expressed his hope that the EU Association Agreement will be 
implemented and all the reforms that have been undertaken within the 
framework of this agreement will be continued. Also on Monday we had 
Dmitry Kozak, who is the deputy prime minister of Russia, who visited 
Moldova after over a 10-year break. He wasn't in Moldova for over 10 
years, and now he came. And he also made some statements. He said that 
the position of the Russian Federation is that the Socialist Party 
should form a coalition with the ACUM, a temporary coalition, and 
prepare for inevitable early elections. I'm just quoting him.
    What does it mean? It means that the parties' minds should form a 
temporary coalition just to make sure that the Democratic Party and its 
chairman Vlad Plahotniuc is not any more in power and change the voting 
system from mixed to the proportional, and then go for early elections.
    There are many debates about this voting system. One of the reasons 
why the voting system has been changed is because if we are looking at 
the proportional voting system, the society was very much polarized, 
and the messaging was very much polarized. And so the country has been 
literally divided into one which is looking pro-West, pro-EU, another 
one which is looking toward Russia.
    But having people voting in the constituencies, people were allowed 
to elect those who would address their local issues, their own needs. 
And as my colleague said, people are tired of geopolitical debates. 
They want better roads. They want better living standards. They want 
good health care, good schools. And all they care is normal, you know? 
They care about their lives, their living standards, and they care 
about the future of their children. So why did the Russian Federation, 
for example, suggest to change the voting system back to the 
proportional one? Probably because then this narrative of--or this 
division, or this polarization, will be back. You know, you choose 
either pro-West or pro-East.
    So this is what happened in Moldova yesterday. We also had the 
director of the Eurasia Department from the State Department. But it 
was a planned visit. It wasn't a political visit. So luckily we had 
representatives from the U.S. Government who were also witnessing there 
on the ground what's going on in our country. Of course, Moldovans 
should assume the responsibility and not wait for foreign partners to 
tell them or to indicate which kind of coalition to do. We definitely 
hope that the political class will find the maturity and reach an 
agreement. We hope that the political parties will realistically assess 
the situation in the Republic of Moldova. It's not easy. It's not at 
all a perfect or ideal situation. And whatever scenario is not good. I 
mean, we need to understand which brings the least damages and risks 
for the country, for the region, and for the rest of the world.
    So in any of these cases or scenarios that have been outlined, 
there are pros and cons. None of them is perfect. But we just hope that 
everything that has been done by the pro-Western coalitions throughout 
the last 10 years, we registered many tremendous results. And of 
course, there is so much more work to be done, including addressing 
corruption issues, including increasing our national defense 
capability, including resolving the Transnistrian conflict, and many 
others. There is a lot of work to be done. And you all have to get 
together, work on a team, and just make Moldova become a rightful 
member of the Western family of nations.
    Thank you very much. [Applause.]
    Ms. Bauman. Okay. Thank you, everyone on the panel. I'm going to 
try to speak a little loudly so we don't have to keep going up to the 
microphone. But I wanted to start with some question and answer and 
discussion. And I'll start by asking--I'm not sure who wants to take 
this question--but how dependent is Moldova's economy--we didn't talk 
too much about the economy--but how dependent is the economy on good 
relations with Russia? And is Moldova diversifying its economy away 
from Russia in preparation for greater European integration? I know 
there's been some issues with trade with Russia in the past, and I'm 
interested in knowing a little bit about how Moldova's diversifying its 
economy. Anyone want to take that?
    Amb. Balan. Thank you very much. I don't know, I had some 
intuition--today I asked for from the minister of economy our trade 
balance with the Russian Federation, with the European Union, and with 
the United States. So I'll just tell you the facts and you judge, okay? 
[Laughs.]
    So looking at the exports of the Republic of Moldova to the United 
States of America--and let's take 2018: $21.77 million. Exports of 
Moldova to the Russian Federation: $218 million, in 2018. And if we are 
talking about the exports of Moldova to the EU, it's $1,862 million, 
okay? So 70 percent of our products are now exported to the European 
Union. The situation has changed from 2014. Before 2014, we've been 
traditionally dependent on the Russian Federation market. As a former 
part of the Soviet Union, if you know history probably you know that 
Moldova has been considered as a breadbasket of the Russian Federation. 
We are mainly, predominantly, an agricultural country. And we've been 
exporting most of our products to Russia.
    In 2014, when we signed the Association Agreement with the European 
Union, Russia imposed embargos on all of our products, which of course 
led to an economic crisis in the country. Many companies, wineries and 
agricultural producers, suffered a lot. We had companies who witnessed 
companies which would go bankrupt. But this was probably a blessing in 
disguise, because we are in 2019 now, right, and we have 70 percent of 
our products already exported to the European countries--European Union 
countries. This is great, because we increased it. Of course, we had to 
adapt our products. We had to increase the quality of our products. Our 
producers had to invest in better technologies. But now we are in good 
shape.
    Okay, it doesn't mean that we are neglecting the Russian market. We 
would like if the Russian Federation would be able to open the market 
for our agricultural producers.
    There are discussions about this. We'll see how it goes. As of now, 
we have basically embargos on all of the products to the Russian 
Federation.
    Ms. Bauman. All right. I will take the questions to the audience 
now. Are there any audience questions? Just speak up and state your 
name and affiliation for the transcript.
    Questioner. Sure, of course. My name is Justine Nuncio [ph]. I'm 
from Congressman Alcee Hastings' office.
    I actually was in Moldova for the Fulbright, and so I actually have 
a domestic question. When I was there, I got to see a lot of villages--
Comrat, Cantemir, Balti, all these cities and municipalities. What I 
noticed and what I spoke to a lot of people there is that there tends 
to be a very young population--little children, babies--and then 
elderly populations. So there seems to be a very large labor drain and 
brain drain from people getting Romanian citizenship and going to the 
EU to work abroad. What is the Moldovan Government doing to bring back 
these people to stay in Moldova and bring their ideas, bring their jobs 
to stay in Moldova?
    Amb. Balan. Anyone from my colleagues want to answer that? 
[Laughs.] Okay, I will answer, and maybe my colleagues would like to 
add something.
    Yes, indeed. This is a phenomenon that we are facing right now. Out 
of--we'll just talk roughly figures. Out of 4 million people, about one 
million are abroad--works abroad. Basically, it's 3.5 and 800, looking 
at it proportionally. Half of this--so, about 400,000 people work in 
the Russian Federation in construction sites, and half works in the 
European Union, as domestic workers, mainly. Well, of course, we have a 
brain drain as well. Young specialists, especially IT engineers, 
immediately after graduating the university are finding jobs in the 
European Union. You know, there is a high demand for this--in this 
specific industry.
    And also, we have many IT engineers who find jobs here in the 
United States. And we have many Moldovans who live on the West Coast 
and in San Francisco, where the high-tech companies are. We need to 
understand also that this is a phenomenon which is not specific only 
for Moldova. This is something that even Poland is facing, or other 
countries which have a more developed economy. And of course, many 
people who receive their Romanian passport and are EU members, they can 
easily find jobs anywhere in the European Union.
    This is a sad statistic for Moldova. People have been flooding out 
of the country throughout the last probably 20-something years. So it's 
not that unique. It's true that the government is seriously looking at 
these issues. How to address this issue?
    First of all, we understand that we have to improve something in 
our country, right? What's the first problem we're talking about? The 
poorest country in Europe, means that we need to improve our economy. 
And we've been showing that during the last years our economic growth 
has been stabilized. And back in 2015, our economic growth was minus 
0.5. Now every year we will be enjoying an economic growth of 3.5 to 4 
percent.
    It's not bad for the region. It's not bad for the country, given 
the entire situation. I'm not sure how our economic performance will be 
during 2019, given all this political turmoil. There are specific 
programs which are aimed to retain especially the most qualified 
specialists in the country. For example, the government of the Republic 
of Moldova has created a legal framework for virtual IT parks in 
Moldova. Basically, any company from anywhere in the world which would 
register virtually in the Republic of Moldova, become a resident--
virtual resident of an IT park--can enjoy a flat rate--tax rate of 7 
percent. So they do not pay any taxes, any wage taxes, anything else. 
You just pay 7 percent and you can hire the IT specialists from Moldova 
and perform and produce high-tech products in Moldova.
    This is one of the problems that we are working on. We developed 
the legal framework. We already are witnessing the inflow of IT 
companies which are registering, that are willing to benefit from this 
legal frame or these taxation facilities. And we as an investor here in 
the United States and we have the entire program to promote this cause. 
And we are planning to organize some events, especially on the West 
Coast. And they would attract U.S. companies to Moldova.
    Dr. Welt. Can I add?
    Ms. Bauman. Oh, yes. Of course.
    Dr. Welt. Just one quick point. I think one underappreciated fact 
that speaks to the importance of Moldova's trade relations with the EU, 
is the fact that even Transnistria, which is controlled, propped up by 
Russia, more than half of Transnistria's trade is with the European 
Union as well, not with Russia. And then overall, just to complement 
the figure of 70 percent of Moldova's exports to the EU, Moldova's 
total trade with Russia is around 10-11 percent. So it is relatively--
it is quite small, and it's substantially less than it used to be.
    The question of remittances is another issue, and the importance of 
the Russian labor market to Moldova is critical, but so is the European 
market as well.
    Ms. Bauman. Yes.
    Questioner. Phil Sloberg [sp]. I'm with Congressman Ben Cline's 
office.
    My mom is Romanian. I spent some time in Moldova, in Chisinau. Most 
of the people that I interacted with there believed that ultimately 
unification with Romania is the only path to a stable Moldova. 
Obviously that's a minority opinion in the country now. Ambassador, 
specifically to you, what is your position on that, due to the 
longstanding cultural, linguistic, ethnic unification between Romania 
and Moldova? Do you think that that's a possibility sometime in the 
future?
    Amb. Balan. I cannot express my personal opinion--[laughter]--
because I am here in the capacity of a representative of Moldova. So I 
speak on behalf of the people of the country of Moldova. And I do not 
only speak on behalf of the government, but in general on behalf of all 
the people.
    I'll just give you some statistics. I'm an economist, so just to 
give my background--that's why I always give figures, you know? So 
according to the polls--I don't know, I haven't looked at the recent 
polls to measure how many people from Moldova are supporting 
unification between Romania and Moldova. I know that the figure was 
about 11 percent. But when we are looking at the Parliament, at the 
parties which end up in the Parliament, we don't have a party in the 
Parliament which is supporting or promoting this cause, okay? So this 
is the level.
    I know personally many people who really believe that this might be 
a solution, because Romania is already in the European Union, it enjoys 
a lot of support. And, you know, it's much easier for a small country 
like ours to be a part of something bigger, you know? And so therefore 
it becomes more resilient to all the challenges that it is overcoming. 
However, this is statistics. Most of the people of Moldova believe that 
Moldova should develop as an independent and sovereign and neutral 
state--neutral country.
    Questioner. Thank you.
    Mr. Kirchick. I would just also add that Romania is a member of the 
European Union and NATO, and so it wouldn't be able to just absorb 
another country without----
    Amb. Balan. Consultations.
    Mr. Kirchick. Yes. [Laughter.] You could say that. The United 
States and other members of NATO would have concerns about how having 
new territory to defend, particularly territory part of which is 
disputed or controlled by Russia.
    Ms. Bauman. Yes.
    Questioner. Yes. I'm Draz Iascu [ph] from Congressman Meeks' 
office.
    And so my question is, it's hard for me to decipher which Romanian 
channels are actually not kind of pumping out propaganda. In Moldova, 
what Moldovan language, let's say, outlets, are more reputable than 
other ones? Is there a list of outlets that you would say that are 
probably more factually accurate, instead of just, like, spreading 
George Soros propaganda, or something?
    Amb. Balan. Well, propaganda in general is a very interesting 
subject in Moldova. And we're talking about different, you know, 
opinion flows. Soros propaganda is one thing that is happening in 
Romania and in other countries, and also in Moldova too. But the 
biggest concern is the Russian propaganda, because we used to have over 
26 TV channels which were directly broadcasting to Moldova from the 
Russian Federation. Recently, during the last year, the Parliament of 
Moldova adopted a law to counter the Russian propaganda. And it 
provides that the Russian channels can--or any foreign channels can 
directly broadcast to Moldova. However, the news or the political 
content has to be produced in Moldova. So this is a way to address this 
issue.
    If we are talking about independent media, or objective media 
outlets, I also have a question to you in the United States, which are 
the independent and the objective media outlets.

    Questioner. Say, some are more adherent to journalistic standards 
than others. So I'll leave it at that. [Laughter.]
    Amb. Balan. It's just a rhetorical question. I'm not looking for an 
answer.
    Questioner. Yes. You know----
    Amb. Balan. I think it's a general phenomenon, you know? And of 
course, this is what we are living with.
    Ms. Bauman. Anyone else have anything to add? Yes. Oh, you want to 
add something?
    Dr. Welt. I wanted to--if folks were interested in talking about 
Transnistria a little bit.
    Ms. Bauman. Oh, yes. Actually, that was one of my questions as 
well, so, anyone? Let's talk about Transnistria. [Laughter.]
    Mr. Kirchick. Go ahead.
    Dr. Welt. Sure.
    Amb. Balan. Go ahead. [Laughter.]
    Dr. Welt. Okay, I'll start, and then I'll turn it over.
    So of all the so-called frozen conflicts--and I think frozen is a 
terrible word, particularly in the context of Ukraine--but all the 
territorial conflicts in the post-Soviet region, what has been striking 
about the Transnistrian conflict is how advanced the conflict 
resolution process is--if not conflict resolution, the conflict 
management process. And unlike certainly Nagorno-Karabakh, between 
Armenia and Azerbaijan, or Abkhazia and South Ossetia, the territories 
in Georgia occupied by Russia, there are regular negotiations, 
discussions, and resolutions to the problems--very practical problems 
that residents of Transnistria and residents around the region face in 
terms of transportation, agriculture, education.
    And it's frankly remarkable, from an observer's perspective, how 
many specific problems Moldovan authorities have been able to resolve 
with the de facto authorities in Transnistria, with the support of a 
very interesting cast of characters--the OSCE, the EU, the United 
States, and the Russian Federation. So it is a rather unique situation. 
One of the questions that I've always had--if I'm able to ask questions 
as well--is why the Russian authorities have been seemingly so 
supportive of a process by which Transnistria works together with the 
rest of Moldova.
    But it is striking.
    Amb. Balan. Okay. Thank you very much for acknowledging the 
progress in Moldova, which has been registered 2 years ago. Before 
that, nothing has been done. And this has been done under the 
leadership of the government, which is led by the Democratic Party. I 
was in Moldova by that time, when all this progress was been done, and 
I was a part of the process. So you can find out firsthand of how this 
progress has been registered.
    So there was a status quo. Nothing was going on. However, there 
were several issues that both Moldovans and Transnistrians were facing 
at the time. And they were simple issues. You know, these were issues 
related to their human rights. There were some of the cultural lands 
which Moldovans could not access. There were some schools in 
Transnistria teaching in Romanian, which also had to be supported, 
things like this. The government of Moldova had discussions with the 
Transnistrian authorities directly, without the involvement of the 
Russian Federation.
    OSCE was a part of this process. I'd been meeting with the 
ambassador of OSCE at that time--who was an American, by the way. So 
we've been discussing and we've been working on this. And when the 
protocols have been signed, basically the Russian Federation found out 
about this a day before that signing.
    Okay, and so this is how this progress has been achieved. Again, 
for those who don't know much about Transnistria, to just give you some 
facts. Transnistria is about 12 percent of Moldovan territory. It also 
consists of about 7 percent of Moldova's population. Moldova's national 
defense capacity, its military and others, is about 8,800 troops. The 
Transnistrian military capacity is 15,000 troops--almost double. Out of 
which, 2.5 thousand Russian troops.
    These are facts and numbers which speak for themselves. We indeed 
achieved remarkable progress, and undoubtably the Transnistrian 
authorities, and probably also even the Russian Federation would like 
to register some progress. They also need probably some success stories 
in the region, just to be able to advance in their relationship with 
the international community. This is my feeling from the discussions 
that I'm having here.
    These results were, first of all, to bring our people together by 
just integrating the Transnistrians into Moldovan life, by giving them 
all the benefits that Moldovans are enjoying right now. We also think 
about the future of the integration of the Transnistrian region. 
However, the final solution of this conflict, frozen conflict, of 
course, depends, again, on Russia's willingness to give up a source of 
regional pressure. And of course, we count on the support of the United 
States and the European Union in the settlement of this process.
    Ms. Bauman. So I think we're about out of time. I'm going to cut it 
off there. But I want to thank all of you for coming today, and for the 
panelists, and for an interesting discussion.
    And thanks again. [Applause.]
    [Whereupon, at 11:14 a.m., the briefing ended.]
                         
                          [all]

  

            This is an official publication of the Commission on
                    Security and Cooperation in Europe.

                  < < < 

                  This publication is intended to document
                  developments and trends in participating
                  States of the Organization for Security
                     and Cooperation in Europe (OSCE).

                  < < < 

           All Commission publications may be freely reproduced,
            in any form, with appropriate credit. The Commission
            encourages the widest possible dissemination of its
                               publications.

                  < < < 

                      www.csce.gov       @HelsinkiComm

                 The Commission's Web site provides access
                 to the latest press releases and reports,
                as well as hearings and briefings. Using the
         Commission's electronic subscription service, readers are
            able to receive press releases, articles, and other
          materials by topic or countries of particular interest.

                          Please subscribe today.