Has Russia failed to buy Moldova?

Russian foreign policy can be described as following: if something cannot be conquered, it will be bought.

Ukraine has been suffering the consequences of such policy since 2013. At first, Russia tried to “buy” the country with a $3 billion loan that was supposed to contribute to the winning of a pro-Russian candidate in the presidential elections.

But when Putin understood that Ukrainian people are incorruptible and express anti-Russian intentions, he chose military aggression that resulted in the annexation of the Crimean Peninsula and a bloody war in Donbas.

Ukrainian scenario became a warning for those countries that were considering a cooperation with Russia, but not for Moldova. A truly pro-Russian Moldovan President Igor Dodon has always called to improve the relations with the Kremlin.

Last year Igor Dodon announced the inter-governmental loan agreement signed between Russia and Moldova.  The agreement envisages a loan of €200 million to Moldova for budget-support, to be disbursed in two tranches of €100 million each within the year 2020.

At first sight, the loan, offered by Russia, seems to provide quite favorable conditions. Reimbursement is staggered over a ten-year period, starting from 2021, in two installments per year at fixed dates and the interest rate of 2 percent annually. However, receiving this loan can lead to serious consequences for security and economy of Moldova:

  • Under the loan agreement, Moldova shall “strive to” encourage Russian-Moldovan joint projects on Moldova’s territory, offering Russian companies equal access to public procurement tenders for goods and services.
  • The loan’s disbursement is conditional on the absence of overdue debts from Moldovan entities to Russian creditors for Russian state-guaranteed or state-insured loans. If such overdue debts are ascertained to pre-exist this agreement, or if they develop during the agreement’s lifetime, this agreement gives Russia the right to consolidate all such Moldovan debts into one state debt and demand immediate repayment. In that case, Russia may well demand repayment through Moldovan property, as Moldova could not pay cash.
  • the money could be allocated for some double-purpose projects, as well as military-oriented.

While the government defends the 200-million-euro loan as advantageous and necessary, opposition politicians and some experts see major flaws that will benefit Moscow and could damage Moldovan interests.

The opposition complains that the negotiations were not transparent, and took place behind closed doors. Pro Moldova deputy Sergiu Sarbu insisted that the agreement favored Russian companies, and notes, among other things, that disputes will not be able to be resolved in international arbitration.

Although the situation with the loan blockade is not over, but it is a “sharp blow to the Kremlin” and a clear demonstration that a strong professional opposition and an honest, independent Constitutional Court are decisive tools to combat a high-level corruption.

Sources:

https://m.censor.net.ua/blogs/3197730/kupvlya_putnim_moldovi_vdmnyatsya

https://jamestown.org/program/russian-loan-for-moldova-a-strange-inter-governmental-agreement/ 

https://balkaninsight.com/2020/04/23/moldova-opposition-spies-hidden-traps-in-russian-loan/

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