CRITERIA FOR U.S. ASSISTANCE UNDER SECTION 498A(a) OF THE FOREIGN ASSISTANCE ACT OF 1961
MOLDOVA
Section 201 of the FREEDOM Support Act amended Section 498A of the Foreign Assistance Act of 1961 to require that the President "take into account not only relative need but also the extent to which that independent state is acting to:"
Section 498A(a)(1): "make significant progress toward, and is committed to the comprehensive implementation of, a democratic system based on principles of the rule of law, individual freedoms, and representative government determined by free and fair elections."
Throughout FY 2004, the Moldovan Government generally maintained its commitment to democracy and the rule of law, although there were some problems related to coverage of opposing political viewpoints in the state-controlled media. Separatist elements, assisted by Russian military forces in the area, declared in 1992 a "Dniester Republic" in Transnistria between the Dniester River and Ukraine. The Moldovan Government does not control this region, where there have been reports of human rights violations.
The current Moldovan Parliament was elected February 25, 2001. The Communists received 50 percent of the total vote and 71 seats in Parliament in elections that OSCE (Organization for Security and Co-operation in Europe)/ODIHR (Office of Democratic Institutions and Human Rights) observers declared free and fair. Parliament selected Communist Party Chairman Vladimir Voronin as President on April 4, 2001.
Nationwide local elections in 2003 generally met international standards, but there were problems during the campaign period, including bias in government-run media, the arrests of two opposition mayors, and misuse of governmental resources for campaign purposes. Regional elections in the Gagauz autonomous region in October 2003 generally met international standards, also with some irregularities. In March 2004 the Gagauz Popular Assembly (parliament) controversially removed the opposition Mayor of the city of Comrat, Constantin Taushanji, from his position.
Corruption is widespread in Moldovan society, undermining the rule of law and hindering political and economic development. The Government of Moldova has shown resolve to combat corruption, creating and staffing a Center for Combating Economic Crime and Corruption, but its efforts have had mixed results.
Section 498A(a)(2): "make significant progress in, and is committed to the comprehensive implementation of economic reform based on market principles, private ownership, and integration into the world economy including implementation of the legal and policy frameworks necessary for such reform (including protection of intellectual property and respect for contracts)."
Moldova's transition to a market economy has made some progress, but has been slow. There are structural problems, particularly in the agriculture and energy sectors and in implementing legal system reform. Progress on privatization has slowed, and corruption is widespread. Since the Communist victory in 2001, the Government has reverted to "planned-economy thinking with tinkering," according to IMF mission staff. Moldova will record its fifth consecutive year of GDP growth in 2004, with year-end real GDP growth predicted at eight percent (excluding the separatist Transnistria region). This growth rate is impressive considering that, prior to 2000, Moldova had recorded only one year of GDP growth since independence. However, it is largely driven by remittances from Moldovans working abroad, which the IMF estimates, at the high end, to be one-third of the labor force. As a result, GDP growth is largely driven by consumption. The flow of foreign currency into Moldova results in an overvalued Moldovan leu, hurting exports and increasing demand for imported consumer goods. Investment as a percentage of GDP is low and in decline. The IMF regards the present GDP growth rate as unsustainable without structural reform. Inflation was estimated to be ten percent in 2004. Sporadic and ineffective enforcement of the law combined with economic and political uncertainty and low levels of income continue to discourage foreign direct investment. Moldova's external debt in 2004 is estimated to total $1.9 billion, or 74% of GDP. Low revenue collecting capacity and the loss of external financing from the international financial institutions (IFIs) will make full debt servicing difficult. Moldova remains the poorest country in Europe, although GDP per capita grew from $422 to $713 over the past year. Poverty indicators have remained unchanged over the past five to six years. Without structural reform, the country is likely to remain poor, even with fiscal and monetary stability.
Moldova adopted some of the basic reforms necessary for a market economy: prices have been largely freed, and the Moldovan leu is fully convertible for current account transactions. Most foreign trade has been liberalized, but the government has imposed export and import restrictions on certain agricultural goods. In July 2004, Moldova resumed interest payments to some creditors. Moldova became a member of the World Trade Organization in 2001. Moldova enjoys Normal Trade Relations with the United States, subject to compliance with the freedom of emigration requirements of the Jackson-Vanik Amendment (which is the subject of semi-annual reports to Congress).
The IMF's Poverty Reduction and Growth Facility (PGRF) for Moldova expired in 2003 leaving three quarters of funds undisbursed. In the same year, the World Bank stopped its SAC-III program. The IMF continues to believe that there is no basis for a new IMF program in view of current government policies. In a positive development in its relations with the IMF, however, Moldova adopted an Economic Growth and Poverty Reducing Strategy Paper (PRSP) in May 2004. However, some of the policy assumptions and directions suggested in the paper are a significant departure from current policies. Until Moldova establishes a credible reform track record, the significance of the PRSP effort is unclear. The Fund continues to emphasize the need for much stronger commitment to reform and action on structural issues, and a halt to fiscal and structural backsliding. The lack of an IMF program is an impediment to Paris Club debt rescheduling.
A law governing the sale and purchase of land took effect in September 1997. Citizens and foreign investors can buy and sell most land at market prices. Foreign investors cannot purchase agricultural land except through a joint venture registered in Moldova. More than 900 former collective farms were privatized as a result of the land privatization efforts, and about one million Moldovan citizens received land titles through 2001. Government-sponsored legislation to facilitate the reintroduction of collective farms has so far not been implemented, yet remains as a disincentive to investment. A largely completed enterprise privatization program fully privatized 2,114 enterprises from many economic sectors, with an additional 321 enterprises privatized in cases where the state holds less than 49 percent of the shares. Privatization results in FY04 were mixed: several small companies were privatized; but the Government of Moldova was unable to privatize several larger state enterprises, notably the two remaining state-run electrical distribution networks. The national energy regulator's refusal to allow the country's largest foreign investor, Spanish-owned electricity distributor Union Fenosa, to raise consumer rates despite increased prices charged by its primary power supplier, in the separatist Transnistria region, exemplified problems with Moldova's investment climate.
The U.S. and Moldova have a Bilateral Investment Treaty that entered into force in 1994 and Moldova has an OPIC agreement. Moldova has also made a number of important legal reforms to enhance intellectual property protection in the past several years and was not a subject of the US Special 301 report in 2004.
Section 498A(a)(3): "respect internationally recognized human rights, including the rights of minorities and the rights to freedom of religion and emigration."
The Government generally respects the human rights of its citizens, but there are continuing problems in some areas. Acting on a 2002 Council of Europe recommendation, the government liquidated state-owned broadcasting company Teleradio Moldova as part of the process of transforming it into a public broadcasting company. The subsequent rehiring process, however, was not transparent and caused concern in the local and international community. Independent monitoring of the new "public" company has shown an unchanged editorial line and continued bias in favor of the government and the ruling Communist Party. Members of opposition parties are often denied access to government-owned media. Nevertheless, there was an active and independent media. In a positive development, on the initiative of President Voronin, Moldova's parliament amended the law to remove criminal penalties for defamation.
The Government generally respected freedom of association and assembly although there were occasions when these rights were restricted as well as instances of harassment of government opponents.
The 1994 constitution provides the legal framework to ensure protection of minority rights, and has received positive assessments from international experts. Gagauzia, a Turkish minority region in southern Moldova, enjoy autonomous status.
Trafficking in persons remained a very serious problem as Moldova is considered a source country, but the Government has increased efforts to combat trafficking. Some persons have reportedly received beatings in police custody. Prison conditions remained harsh, with attempts to improve them hampered by lack of funding.
The Government generally recognizes freedom of religion in practice, although it has continued to deny registration to some religious groups, including two Muslim groups and the Church of Jesus Christ of Latter Day Saints (the Mormons). A number of minority religious groups in Transnistria, a break-away region not under the control of the Moldovan Government, continued to be denied registration and are subjected to harassment by the Transnistrian separatists. In July the Transnistrian Supreme Court ruled against the Jehovah's Witnesses, upholding a Tiraspol city prosecutor's suit to annul the group's registration and ban its activities in Transnistria.
Reports exist of human rights abuses by the authorities in the separatist Transnistrian region, among them discrimination against Romanian/Moldovan speakers. Transnistrian "presidential" elections on December 9, 2001 were reportedly plagued by abuses. The OSCE remains involved in investigating reported severe human rights abuses by Transnistrian security police in the village of Chitcani between 1992 and 1997, including severe beatings, murder, and disappearances. In July 2004 Transnistrian authorities moved to shut down schools operating in Transnistria under the auspices of the Moldovan Ministry of Education (teaching in the Romanian language using Latin script). Thanks to heavy international pressure on the separatist authorities there was progress on this in fall 2004, but at least one school remained closed at the end of FY2004.
Moldova has abolished the requirement for exit visas for travel abroad but individuals wishing to emigrate must settle financial and judicial obligations and receive approval from dependent relatives before permission to emigrate is granted. The Government may also deny permission to emigrate if the applicant had access to state secrets; such cases are very rare, however. No cases of denial of permission to emigrate were reported since 2003.
Section 498A(a)(4): "respect international law and obligations and adhere to the Helsinki Final Act of the Conference on Security and Cooperation in Europe and the Charter of Paris, including the obligations to refrain from the threat or use of force and to settle disputes peacefully."
Moldova takes seriously its participation in the OSCE and its commitments under the Helsinki Final Act. The Transnistria region of Moldova, along the Ukrainian border, remains under the control of separatist forces. A Russian-brokered cease-fire in Transnistria has held firm since July 1992. The cease-fire established a tripartite peacekeeping force comprised of Moldovan, Russian, and Transnistrian units that have prevented a return to the use of force in the region. Since its election in 2001, Moldova's Communist government has made resolution of the ongoing conflict a top priority. Nonetheless, it has been unable to make significant progress because of fundamental disagreements with the separatist authorities in Transnistria over the status of that region and continued tacit Russian support for the separatists.
In late November 2003 Russia unilaterally proposed terms for a settlement, outside the framework of the ongoing mediation by Russia, Ukraine and the OSCE. The Russian proposal was not endorsed by the other mediators, and was rejected by Moldovan President Voronin. Demonstrations protesting the proposed deal were managed peacefully. In September 2004 President Voronin proposed a "Pact on Stability and Security for Moldova" according to which the proposed signatories (Russia, Ukraine, the U.S., the EU and Romania) would pledge to support Moldova's sovereignty, territorial integrity and democratic institutions. The draft "Pact" was subsequently recast as a political "Declaration," but as of the end of FY04, Russia was refusing to consider the document.
Section 498A(a)(5): "cooperate in seeking peaceful resolution of ethnic and regional conflicts."
At the November 1999 OSCE Summit in Istanbul, Russia committed to withdraw its military equipment limited under the Treaty on Conventional Armed Forces in Europe (CFE) by the end of 2001, and to withdraw its remaining military forces by the end of 2002. These commitments were reflected in the CFE Final Act and the Istanbul Summit Declaration. Ahead of schedule, Russia met its commitment to withdraw from Moldova all its equipment limited by the CFE Treaty, despite significant Transnistrian opposition. However, Russia missed the original December 31, 2002 deadline for withdrawal of its military forces from Moldova, and still has not completed the job, though progress has been made. Moldova has supported OSCE efforts to work with Russia, Transnistrian authorities, and OSCE experts to move forward on with withdrawal or disposal of remaining arms and ammunition stored at Russian depots in Transnistria. The U.S. and many other OSCE states have committed to assist with contributions to an OSCE Voluntary Fund to help defray the cost of destroying or removing the Russian ammunition stored in Moldova, provided all necessary accounting and verification requirements are met. At the December 2002 OSCE ministerial in Porto, Russia committed to complete the withdrawal as soon as possible and stated its intent to do so by December 31, 2003. Although some progress was made during 2003, Russia again failed to meet this commitment on schedule. Although the Russians maintain that Transnistrian opposition to their withdrawal is the core problem, the U.S. and other OSCE states have underscored that Russian political will, and their readiness to use their considerable influence over the Tiraspol regime, are the key to success. This process remained stalled throughout 2004 Moldovan authorities have been cooperative by continued insistence on fulfillment of the Istanbul commitments and by constructive efforts in the political settlement process despite Transnistrian obstructionism.
Section 498A(a)(6): implement responsible security policies, including --
(A) adhering to arms control obligations derived from agreements signed by the former Soviet Union;
(B) reducing military forces and expenditures to a level consistent with legitimate defense requirements;
(C) not proliferating nuclear, biological, or chemical weapons, their delivery systems, or related technologies; and
(D) restraining conventional weapons transfers."
Moldova has formally declared its willingness and intent to accept all of the relevant arms control obligations of the former Soviet Union. Moldova ratified the CFE Treaty on July 6, 1992 and the 1996 Flank Document on May 15, 1997. Compliance with these obligations has been good. Moldova participates in the CFE Joint Consultative Group and was an active participant in negotiations on adaptation of the CFE Treaty. At the OSCE Summit in Istanbul, Moldova elicited from Russia a commitment on withdrawal of Russian forces from Moldova in the context of signature, including by Moldova, of the Agreement of Adaptation agreement. Moldova has actively cooperated with efforts to overcome continuing problems resulting from the obstructive measures by the Transnistrian separatists to hinder Russian force withdrawals or to allow unimpeded CFE Treaty inspections and other inspections/observations of Russian forces located in the region and Russian unwillingness to fulfill their Istanbul withdrawal commitment. Moldova has regularly submitted its CFE Treaty data, including data as of January 2004.
Moldova has provided Confidence and Security Building Measures (CSBM) annual data declarations regularly, including data as of January 2004, and has willingly accepted CSBM inspections and evaluation visits in accordance with the OSCE Vienna Document.
Moldova's armed forces are reorganizing and developing, with U.S. assistance, a peacekeeping battalion capable of interoperation with international peacekeeping forces. This battalion will form the core of Moldova's armed forces, which have a current strength of about 6,900, including about 1,900 civilians. A portion of the battalion is deployed in the Moldovan/Transnistrian security zone. Twelve soldiers are currently deployed to Iraq for post-conflict humanitarian assistance. Two Moldovan staff officers are serving on the staff of U.S.-led Multinational Division (North) in Bosnia. Moldova has one army officer serving as a liaison officer to CENTCOM in Tampa, Florida. These efforts are consistent with legitimate defense requirements as required by the statute.
Moldova acceded to the Nuclear Non-Proliferation Treaty (NPT), as a non-nuclear-weapon state, on October 11, 1994. The Government of Moldova signed a safeguards agreement with the International Atomic Energy Agency on June 14, 1996, but this has not yet entered into force. In May 2002, penalties were imposed on two Moldovan entities, under the Iran Nonproliferation Act of 2000, for the transfer of equipment and technology on multilateral control lists to Iran. In May 2003, sanctions were again imposed on these entities and an individual under the U.S. Missile Sanctions Law; the sanctions were placed on private entities, not the Government of Moldova. On November 25, 2002, Moldova subscribed to the Hague Code of Conduct against Ballistic Missile Proliferation. The Government of Moldova has supported international nonproliferation efforts.
During 2004, there was no indication the Moldovan Government transferred conventional weapons to state sponsors of terrorism or other illicit destinations. Moldova has increased efforts to strengthen control over its borders, including participation by Moldovan customs and border guards in U.S.-assisted counter-proliferation programs designed to halt the flow of illicit WMD materials and conventional arms. Moldova issued new customs stamps in September 2001, with U.S. assistance, as required subsequent to its WTO admission, in an attempt to reduce smuggling operations across and along the Transnistrian part of the Ukrainian/Moldovan border. The GOM and the Government of Ukraine signed a Customs Protocol in May 2003, whereby the Ukrainian Government promised to honor only Government of Moldova-authorized customs seals, a positive step towards stopping the movement of contraband in the region. The GOM introduced new embossed Customs stamps and seals, to limit the potential for forgery and fraud, at all Moldovan points of entry/exit in January 2004. Moldova is also attempting to set up joint Moldovan/Ukrainian border posts on Ukrainian territory along that portion of its border with Ukraine controlled by the Transnistrian separatists to minimize smuggling. To further increase GOM control over sensitive Transnistrian exports, in 2004 the U.S. assisted the GOM in outfitting twenty-two mobile customs inspection teams to patrol the "internal border" between Transnistria and Moldova. These teams will be augmented by the National Police to effectively provide coverage at nearly one hundred checkpoints where no previous inspection/enforcement capability existed. The U.S. also is continuing its efforts to cooperate with Moldova in strengthening Moldova's export control system, in terms of both industry compliance and enforcement capabilities - in particular, with respect to enhancing the Moldovan Government's ability to target and inspect suspicious cargo.
Moldova is a State Party to the 1993 Convention on the Prohibition of the Development, Production, Stockpiling, and Use of Chemical Weapons and on Their Destruction (CWC). In September 1997, Moldova became a member of the International Atomic Energy Agency. The U.S. considers Moldova to be a party to the INF Treaty as a successor state to the Soviet Union. Moldova has taken no action that would call into question its commitments to that treaty and adheres to the statute.
In November 2004, Moldova's parliament ratified the 1972 Convention on the Prohibition of the Development, Production and Stockpiling of Bacteriological (Biological) and Toxin Weapons and on their Destruction (BWC).
Section 498A(a)(7): "take constructive actions to protect the international environment, prevent significant transborder pollution, and promote sustainable use of natural resources."
While information on specific "constructive actions" undertaken by the Moldovan Government to reduce cross-border pollution is limited, Moldova is taking steps to reduce overall levels of pollution. Moldova ratified the Stockholm Convention on Persistent Organic Pollutants in February 2004 and developed a national implementation plan. The government is working with the World Bank on a project to repack and safely store obsolete pesticides. Some of this work has already been done by Moldova's Ministry of Defense.
The U.S. cooperated with the EU in the creation of a Regional Environmental Center (REC) in Moldova, the mission of which is to strengthen civil society and support sustainable development by promoting public awareness and participation in environmental decision-making. The REC successfully executed one round of small project grants to environmental NGOs. In addition, Moldova has created a Joint Environmental Committee with Romania to broaden collaboration on regional environmental issues.
Section 498A(a)(8): "deny support for acts of international terrorism."
The Government of Moldova does not grant sanctuary from prosecution to individuals or groups that have committed acts of international terrorism or otherwise support international terrorism. Moldova is a party to ten of the twelve international counter-terrorism conventions.
Following the September 11, 2001 attacks in the U.S., Moldova quickly passed the Law on Combating Terrorism on October 12, 2001, a new anti-terrorism law that provides the legal framework for combating terrorism, sets out the rights and obligations of law enforcement agencies, and details the manner in which the agencies will be coordinated and supervised. The Moldovan Government has cooperated with all USG requests on blocking terrorism financing.
Section 498A(a)(9): "accept responsibility for paying an equitable portion of the indebtedness to United States firms incurred by the former Soviet Union."
In October 1991, shortly before the Soviet Union dissolved, Russia and eleven other Soviet republics, including Moldova, signed a Memorandum of Understanding declaring themselves jointly and severally liable for the foreign debts of the former Soviet Union (FSU). In December 1991, Russia and seven other republics signed an agreement that assigned to each of the Newly Independent States shares of both all the external assets and all foreign debt of the FSU. Moldova did not the December 1991 agreement.
In 1992, Russia sought to replace the principle of joint and several liabilities with full liability for the foreign debt of the FSU in return for all the external assets of the FSU. On October 19, 1993, Moldova signed a "double-zero option" agreement with Russia under which Russia agreed to assume Moldova's share of the foreign debt of the FSU debt in return for Moldova's share of the FSU's external assets.
(Please see section 498A(a)(9) of the Russia assessment regarding indebtedness to the United States incurred by the former Soviet Union.)
Section 498A(a)(10): "cooperate with the United States Government in uncovering all evidence regarding Americans listed as prisoners-of-war, or otherwise missing during American operations, who were detained in the former Soviet Union during the Cold War."
The U.S. effort to uncover evidence of American POWs and MIAs in the former Soviet Union is being conducted through the U.S.-Russian Joint Commission on POWs/MIAs, established in March 1992. Moldovan officials warmly welcomed the U.S. side of the Commission in August 1995. With the full support of the Moldovan Government, the U.S. Chairman also made an appeal to the people of Moldova, asking them to come forward with information. Moldova has also fully supported subsequent inquiries in Moldova.
Section 498A(a)(11): "terminate support for the communist regime in Cuba, including removal of troops, closing military and intelligence facilities, including the military and intelligence facilities at Lourdes and Cienfuegos, and ceasing trade subsidies and economic, nuclear, and other assistance."
We have no evidence from which to conclude that the Government of Moldova is providing military, intelligence, economic, nuclear, or other assistance to the Government of Cuba.
CHECKLIST FOR GROUNDS OF INELIGIBILITY UNDER SECTION 498A(B) OF THE FOREIGN ASSISTANCE ACT OF 1961
MOLDOVA
Section 498A(b)(1): Has the President determined that the Government of Moldova has "engaged in a consistent pattern of gross violations of internationally recognized human rights or of international law"?
No. The President has not made such a determination at this time.
Section 498A(b)(2): Has the President determined that the Government of Moldova "has failed to take constructive actions to facilitate the effective implementation of applicable arms control obligations derived from agreements signed by the former Soviet Union"?
No. The President has not made such a determination at this time.
Section 498A(b)(3): Has the President determined that, after October 24, 1992, the Government of Moldova "knowingly transferred to another country --
(A) missiles or missile technology inconsistent with the guidelines and parameters of the Missile Technology Control Regime (MCTR); or
(B) any material, equipment, or technology that would contribute significantly to the ability of such country to manufacture any weapon of mass destruction (including nuclear, chemical, and biological weapons) if the President determine(d) that the material, equipment, or technology was to be used by such country in the manufacture of such a weapon"?
No. The President has not made such a determination at this time. In May 2002, penalties were imposed on two Moldovan entities, under the Iran Nonproliferation Act of 2000, for the transfer of equipment and technology on a multilateral control list to Iran. Additional sanctions were imposed on these entities and an individual in May 2003 under the U.S. Missile Sanctions Law for the transfer of MTCR-controlled items to Iran. However, these penalties are specific to these private entities and the individual and do not apply to the Moldovan Government.
Section 498A(b)(4): Is the Government of Moldova "prohibited from receiving such assistance by section 101 or 102 of the Arms Export Control Act or sections 306(a)(1) and 307 of the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991?"
No. We do not have information from which to conclude that the Government of Moldova is prohibited from receiving assistance under these statutes.
Section 498A(b)(5): Has the President determined and certified to the appropriate congressional committees that the Government of Moldova "is providing assistance for, or engaging in non-market based trade (as defined in section 498B(k)(3) with the Cuban Government? If so, has the President taken action to withhold assistance from Moldova under the Foreign Assistance Act within 30 days of such a determination, or has Congress enacted legislation disapproving the determination within that 30-day period?"
No. The President has not determined that the Government of Moldova is providing assistance for, or engaging in any non-market-based trade with, the Cuban Government.
