Current state and future of the Moldovan Euro-Integration

A direct contact among the University students from the Czech Republic, Hungary, Poland, Slovakia and Moldova inspired students to thought-sharing. Short essay bellow shows what the students have to say on the topic of European Integration and Reform Experience of the Visegrad countries and how it relates to Moldova’s European path.

Title: Current state and future of the Moldovan Euro-Integration
Author: Samuel Goda
University: Matej Bel University, FPS and IR, 3rd

Moldovan dilemma about the future strategic direction of the country seems to be resolved by signing the Association Agreement (AA) including the part on Deep and Comprehensive Free Trade Area (DCFTA) between Moldova and EU. However, this is a wishful thinking. The real challenges are just waiting for both Moldova and the EU.

One of the very useful analyses[1], elaborated by the Moldovan think-tank ExpertGrup, summons the main outputs of accession to the DCFTA would be as follows: a) cancelling Moldovan customs duties for imports from the EU and Turkey; b) a 5% increase in export prices for Moldovan agrifood products exported on the European market, for Moldova’s industrial products the European tariffs are already zero; c) 20% increase of export prices for the agricultural products and 5% of export prices for Moldovan industrial products exported on the Turkish market; d) 8% increase of agricultural sector production costs, necessary to meet the sanitary and phytosanitary European standards (EUREPGAP).

There are clear benefits for Moldovan economy according this analysis and we believe that European integration is an appealing project for Moldovans. On the other hand, being based on economic factors, the analysis omits other facts regarding the possible Moldovan euro-integration, especially the reaction of Russian federation and other CIS countries (Moldova being a part of CIS FTA). This would have negative effects especially (among others) on the Moldovan energy sector which is dependent on Russia, as well as in societal dimension counting circa 500 000 Moldovans working in Russia.

Regarding the domestic discourse on the effects of AA and DCFTA, resp. closer integration with the EU, there are several concerns that the DCFTA would e.g.: destroy the domestic production as a consequence of custom duties cancellation; enable entry of low quality European products; halt the export of Moldovan products due to quantitative quotas, etc.. In this regard, “myth busting” could be an area where the V4 countries via own governmental organizations and non-governmental organizations could play a vital role. The institutional memory of V4 countries governmental organizations and V4 countries NGOs is rich in this regard and provides an interesting comparative advantage to other countries. The process of economic and political transformation did not undergo smoothly in V4 countries as well. However, this experience could serve as a prevention and “lesson learned” for Moldovan elites. Thus, sharing not only V4 success stories but also “failures” could be a useful example for Moldovan business, political and civil elites not to repeat the same mistakes.

One of the main obstacles to Moldovan euro-integration is the unresolved conflict in Transdniestria. The separatist in Tiraspol have very close ties to Russia and thus, we believe that, unfortunately, Moldova and EU would not be solely able to (at least partially) settle this conflict without Russia. Regarding the security guarantees in the short a medium term – these should be assured by the European Union (Moldovan governments repeatedly rejected membership in NATO in short term horizon). According to theories of development and functionalism, stable and prosperous economy (assured by EU) provides a certain level of security in all vertical and horizontal levels (units). V4 countries do not have experience with such frozen conflicts. Nonetheless, we believe there is a space for further engagement via systematic development aid for common Chisinau-Tiraspol projects or via enhanced diplomatic advocacy for conflict settlement within the EU and OSCE.

We believe that elites not only Chisinau, but also in Tiraspol, are aware of long-term benefits from integration with the EU. However, the Russian foreign policy using energy supplies and Russian minority issues as its instruments causes serious dilemma for Tiraspol leaders. Moreover, it is not possible to hide a fact that it also is a highly beneficial business with economic shortcomings for Transdniestrian leaders. It is important to underline that until the end of 2015, mutual economic relation between EU and Transdniestria is based on the system of Autonomous trade preferences, which should be replaced afterwards by DCFTA. Therefore, the EU has also one very strong instrument for further negotiations – the common European market. Transdniestrian economy is characterized as an extremely open and thus we can expect that Transdniestrian economic elites would be interested to cooperate with the EU.

Countries from the V4 region are well equipped to assist Moldovans on their euro-integration path. Each V4 country should identify its strength or “field of expertise” which could be afterwards transferred to Moldova. Finding common “V4 strategy” towards Moldova could be a first step. We believe that this could be reached on the platform of NGOs, as they prove expertise and flexibility, with different forms of support from national governments.

[1] Prohnițchi, V., „Strategic comparison of Moldova’s integration options: Deep and Comprehensive Economic Integration with EU versus Accession to the Russia-Belarus-Kazakhstan Customs Union”, Economic Analysis and Forecast Paper No 3/2012, Expert-Grup QUO VADIS MOLDOVA