Moldova: An unravelling success story?
By Sean L Hanley, on 5 June 2013
Vlad Filat, until recently Liberal Democrat Prime Minister of Moldova, is locked in a power struggle with Vladimir Plahotniuc, the country’s one and only oligarch. This war of attrition threatens the Eastern Partnership’s ‘success story’ and with it Moldova’s reform project says Andrew Wilson.
Not every policy detail may have been perfect in Moldova since 2009, but at least the narrative seemed right. Eastern Europe’s only ruling Communist Party fell from government. The changeover was mythologised as the ‘Twitter Revolution’ – a precursor of the ‘Arab Spring’ and ‘Moscow Winter’ – although in fact it was a prosaic process of elections and parliamentary arithmetic. The Communists were replaced by the smooth-sounding Alliance for European Integration, which was soon getting rave reviews for its reform efforts from the EU. Tiny Moldova leapfrogged the other five states in the Eastern Partnership and seemed to be first in the queue to sign an Association and Deep and Comprehensive Free Trade Agreement at the Vilnius summit in November 2013.
By 2013, however, reviews were getting more mixed. Since the beginning of the year, Moldova has plunged into the kind of political infighting reminiscent of Orange Ukraine at its worst. After a previous crisis over the presidency was solved in 2012, it had seemed the current parliament would sit out a full term until the next elections are due in 2014. Today, Moldova has to sort out three simultaneous problems: it has no stable government, new elections are threatened and it is limping toward the November summit. It might collapse over the finishing line or just before; it might have a sudden burst of energy in the finishing strait; or it might fail a last-minute dope test.
So what went wrong? In reality, the three-party Alliance for European Integration was badly designed at birth; more exactly, at its rebirth. The first incarnation of the AEI in 2009-2010 struggled with a minimal majority over the Communists. That majority was improved at new elections in November 2010, but the elections also gave Russia the chance to push hard for an alternative alliance between the Communists and the pivotal Democratic Party (which includes many ex-Communists). Vladimir Putin sent his right-hand man, Sergei Naryshkin, to Chisinau to seal the deal. He didn’t succeed but encouraged the Democrats to secure a high price for not defecting back to the Communists, with the signing of a secret agreement in December 2010, leaked in 2012, to partition not just ministries but also supposedly neutral state institutions and revenue streams among the AEI’s three component parties.
The largest of the three parties, the Liberal Democrats, claim that their ministries spearheaded subsequent reform efforts, while the other parties simply policed their respective spheres of influence. The Liberals are the AEI’s most ideological, pan-Romanianist party; but their leader, Mihai Ghimpu, has long been obsessed with removing the Liberal Democrat prime minister, Vlad Filat. Others claim that all three AEI parties have overseen corruption within ‘their’ sector: the Democrats in the legal sector, the Liberal Democrats in customs (see below), and the Liberals in the airways and railways, via the Ministry of Transportation.
The Democrats and the legal system
The Democrats, financed by Vladimir Plahotniuc, Moldova’s lone ‘oligarch,’ took over the legal sector. They already controlled many courts, which they had used to protect the financial operations of the old Communist elite – and indeed to take over many of those operations. Although now in opposition, the Communists therefore de facto helped the Democrats by continuing to block attempts to reform the system they had set up before 2009.
But the Democrats also pushed hard to expand their influence, adding the Prosecutor General’s office and the National Anti-Corruption Centre (NAC) to their empire. The NAC was set up with good intentions in 2002 but turned into its ironic opposite: its legal powers were used to soften up and take over businesses targeted by Plahotniuc. The scourge of so-called raiderstvo [corporate raiding] actually increased. In 2010-2011 Moldova-Agroindbank (the largest domestic bank), Victoriabank (the second largest), Banca de Economii (the Savings Bank of Moldova) and the largest insurance company, ASITO, all saw sudden and often unexplained changes of ownership to obscure offshore companies, usually on the basis of secret court proceedings. Two of the alleged victims, Victor and Viorel Topa, now have a case before the English courts, accusing Plahotniuc of orchestrating the change to seize their assets. Banca de Economii has also been accused of laundering $53 million out of the $230 million for the Russian suspects in the Magnitsky case.
Filat vs. Plahotniuc
In December, Filat accepted the need for a review of the case. In the same month, an opportunity arose to do something about the Democrats’ state capture, when a local businessman was shot on a hunting trip attended by Valeriu Zubco, the Democrats’ Prosecutor General. Zubco was accused of orchestrating a cover-up and forced out of office in January. Filat had been chomping at this particular bit for a long time. He had failed to get rid of Zubco in October 2011 and resorted to chipping away at the edges of Plahotniuc’s empire, dissolving the Economic Courts in July 2011, after an abortive judicial reform in 2010. The long-running saga of dismissing Ion Muruianu, the alleged linchpin of judicial corruption, as chairman of the Supreme Court had also sapped the government’s strength.
The Democrats instantly fought back, using the NAC to launch investigations against leading Liberal Democrat ministers. Filat was accused in turn of capturing the customs service, and using it to run a vast tobacco smuggling operation. The accusations were amplified on Plahotniuc’s TV channels, Prime and Publika (the takeover of Publika in the summer of 2012 gave him more than a 50 percent media share).
Moldovan politics had seemed stalemated between the AEI and the Communists since 2009. But political loyalties were now scrambled. All parties in parliament now began making fluid alliances with one another – and encouraging defectors from opposition ranks. Filat was able to use Communist votes to remove Plahotniuc as deputy chairman of parliament on 15 February but could do little to offset the damage to his own reputation.
On 5 March, Filat was defeated in a confidence vote, but he realized that hanging on to office in some form, no matter how, was key, both to his own survival and to any hopes of containing Plahotniuc. Unlike neighbouring Ukraine, he could not play a game of divide and rule among the local oligarchs, as there was only one – Plahotniuc. Filat could only counter-balance Plahotniuc’s financial resources if he still controlled the resources of the state.
Shock deal with the Democrats
Filat therefore sought re-nomination as prime minister on 10 April. The AEI was no more, but his own party remained reasonably solid behind him. The Liberal Party split (see below). There were also a handful of defectors from the Communist Party. This was a plurality but not a majority; Filat could have tried to govern alone or maintain the informal alignment with the Communists. The decision on 17 April to strike a power-sharing deal with the Democrats therefore came as a shock. Worse, it looked like a bad deal: the Democrats were left in control of all the key legal ministries. Plahotniuc’s ally, Corneliu Gurin, was made Prosecutor General. Gurin was not formally a Democrat, as Filat had fought hard to break the quota deal. But he wasn’t really an independent either; until January he had been a member of one of Plahotniuc’s ‘pocket parties,’ the Democratic Action Party. Prosecutors were also made harder to dismiss ‘for subjective reasons.’ Another Plahotniuc ally, Viorel Chetraru, was confirmed, and entrenched, as head of the Anti-Corruption Center.
Worse still, Filat endorsed a switch to a mixed voting system for the next elections, using both proportional representation and territorial constituencies. Recent experience in Ukraine and elsewhere has shown that territorial constituencies are more prone to corruption. In Moldova, the Democrats would have the edge with their money, and the Liberal Democrats with the ‘administrative resources’ they enjoyed in government. The Democrats have also been accused of buying up the votes of the ethnic minority Gagauz. The deal threatened to turn Moldova into a condominium – a two-party state of the Democrats and Liberal Democrats.
Or even a one-party state. The Democrats quickly grew over-confident, because the logic of their ‘business’ model required monopoly control. Filat accused them of being behind the shock announcement by the Constitutional Court on 22 April that he was barred from standing again as prime minister for ‘tolerating ministers suspected of involvement in corruption.’ This fell short of accusing Filat himself of corruption but made the former prime minister alone, somewhat bizarrely, collectively responsible for the actions of his ministers. Ironically, Filat had acquiesced in the appointment of two new judges to the court in April and May, which made him look shortsighted in the extreme: most of the court’s six members were now under the influence of the Democrats or Liberals.
Filat fights back
Filat seemed down and out. Foreign Minister Iurie Leanca was made acting prime minister. But there was now no need for Filat to stick to the deal with the Democrats. On 25 April, a combination of Liberal Democrat and Communist votes dismissed the nominal Democratic Party leader, Marian Lupu, as chairman of parliament; the next day the same parties combined to promote Liberal Democrat Liliana Palihovici from deputy chairwoman to acting chairwoman.
On 3 May parliament passed several other fight-back measures – seven laws in total. The mixed election system was dropped, which was good for democracy and bad for the Democrats. On the other hand, the threshold in parliamentary elections was raised from 4 percent to 6 percent, which was bad both for democracy and for the Democrats; most opinion polls gave them below 10 percent. In case they tried to get around this barrier by leaping into bed with others, the threshold would now be 9 percent for any alliance of two parties, or 11 percent for more than two parties. In a concession to the Communists, it would be possible to vote with old-style Soviet passports. Moldova has ID cards, but many of the Communists’ elderly voters still have the old documents.
The vote of no confidence on 5 March was defined as ‘a political act,’ not an accusation of corruption against Filat. Parliament was given the power to sack judges by a three-fifths vote, although this proved too controversial; and the law was sent back by President Timofti on 8 May. Timofti signed four of the other laws the next day.
Retrospective ring fencing, or ‘de-politicization’ of the key legal ministries was also attempted. Gurin’s appointment as Prosecutor General was cancelled, after accusations that two votes had been fraudulently cast in his original election. The Anti-Corruption Centre was made responsible to the government rather than parliament. Leanca was given more power as acting prime minister, including the ability to sack ministers. He was, after all, a Liberal Democrat, so it seemed they were reverting to the option of governing alone, supported by tactical voting with the Communists and the three members of parliament from the Mishin group, as well as some or all of the seven out of 12 lawmakers from the Liberal Party who had declared themselves ‘Reform Liberals,’ to provide tactical support for Filat.
Finally, on 15 May Leanca was given the chance to win nomination as a normal, not just ‘acting,’ prime minister and to form a full cabinet. He was instantly smeared with a flood of compromising material relating to misuse of expensive cars in Moldova’s Moscow Embassy while he was foreign minister.
If they could batten down the hatches, the Liberal Democrats’ plan was to survive until the November summit. There was enough momentum in negotiations with the EU for the agreements to be initialled, if not signed. Filat could then claim the credit and face the voters in 2014. The alternative – an earlier election in the autumn before the Vilnius summit – looked much riskier. Moldovan voters have been split in two camps since at least 2009, but all the infighting within the AEI might cost the Liberal Democrats the voters within their own camp. Perhaps, except that the underlying assumptions of Moldovan politics might be changing: with the Democrats seeking to jump from minority party status to state capture in one go. That would threaten the Communist vote, so early elections were not necessarily in their interest.
It has actually suited the Democrats’ interests to hide behind the AEI. Now that their blocking role was more widely known, they could be locked into a dangerous game of double or quit. Or Moldova’s state could truly be ‘captured’ by one party or more; in which case the Eastern Partnership’s ‘success story’ narrative would truly have collapsed. But Plan B is often a lot like Plan A. Something like a Liberal Democrat coalition may continue, and the EU can look more clearly at whether it is delivering on reform, and deserving of support.
Andrew Wilson is Reader in Ukrainian Studies at UCL-SSEES.
Note: This article gives the views of the author(s), and not the position of the SSEES Research blog, nor of the School of Slavonic and East European Studies, nor of UCL.