EU-Russia Dialogue
Life After the Coalition: What Now for Moldova?

The pro-Russia Party of Socialists of the Republic of Moldova has managed to accumulate an impressive amount of institutional power. But this concentration of power brings not only advantages, but also greater vulnerabilities, especially when there are plenty of destabilizing factors at work, from uncertain gas supplies to mass voting by residents of the breakaway region Transnistria.

November 2019

When Moldova held parliamentary elections back in February, it was widely expected that the Democratic Party of Moldova (DPM), controlled by local tycoon Vladimir Plahotniuc, would strike a deal with the Russia-oriented Party of Socialists of the Republic of Moldova (PSRM), led by President Igor Dodon. Despite publicly displaying bitter rivalry, the two parties had cooperated closely before. DPM had always had the upper hand, with PSRM playing a junior partner role, and a post-elections majority in parliament would have formalized this unspoken asymmetric alliance. Yet after protracted negotiations with DPM, PSRM suddenly changed its position and established a counterintuitive coalition with the pro-European bloc ACUM (Now). Plahotniuc soon fled the country, the co-leader of ACUM Maia Sandu became prime minister, and PSRM claimed the chair of parliament speaker.

This governing majority survived for five months. Last week, PSRM decided to pull the plug. In the space of just two days, the parliament first dismissed Sandu's cabinet and later installed a new government, with the support of 62 out of 101 deputies. Both of these moves had become possible due to a renewed informal partnership between PSRM and DPM. It may look like, politically, Moldova is back to square one, but this impression is misleading.

(Un)intended Effects

Although short-lived, the previous coalition changed Moldova's political landscape in at least three respects.

First, the coalition resuscitated Moldova's chaotic pluralism, which had been imperiled by Plahotniuc's ambition to build a ruthless power vertical which with every passing day squeezed out rivals and allies alike. It was concerns for their political survival that pushed ACUM and PSRM to conclude a pact and thus curtail this monopolization drive before it was too late. If Plahotniuc had stayed on as an informal ruler for four more years, it would have been more costly to dislodge him from power.

The reset of pluralism unlocked political competition. On the right side of the spectrum, ACUM was harshly criticized for making peace with PSRM. On the left side, the populist leader of Nasha Partia (Our Party) Renato Usatii returned from exile in Russia and relaunched competition with PSRM. In the absence of its patron, DPM, instead of scheming how to swallow up other political forces, vacated its luxurious office in Chisinau's downtown and strived to redefine itself as an opposition party. And at the same time, regardless of the coalition agreement, ACUM and PSRM never stopped competing against each other. This surprising coalition thus saved one of independent Moldova's achievements: often confusing but vibrant political pluralism, reflected in the variety of candidates and political parties that participated in local elections last month.

Second, the coalition broke an important taboo in Moldovan politics. Never before had two political forces with opposing foreign policy concepts openly formed a government. The informal coalition between DPM and PSRM does not count: in the past, DPM was pro-European more in words than in deeds. In addition, the alliance between the two was never recognized in public, but was the result of backstage understandings never set down on paper. The coalition between PSRM and ACUM was different: it was public, recognized, and institutionalized. It created an important precedent, multiplying the number of possible post-election governing constellations in Moldova. Although the experience was disappointing, time heals all wounds, and from now on, such coalitions cannot be ruled out.

The coalition broke an important taboo in Moldovan politics. Never before had two political forces with opposing foreign policy concepts openly formed a government

Thirdly, the June political deal resulted in an ACUM-dominated government. Only two ministers (the defense minister and the deputy prime minister for reintegration) were nominated by PSRM; the rest came from its coalition partner. For many ministers and junior officials recruited by ACUM for the public service, this was their very first experience in government. The injection of fresh blood changed the style and substance of the act of governing. De-monopolization, de-oligarchization, the fight against corruption, and judiciary reform were the main campaigns of this government. ACUM also tried to bring more transparency and to communicate better with the public. It was not without mistakes, but the contrast with the DPM government was enormous, and Moldovans did not fail to notice that. In its first local elections, ACUM became the second political force in district and municipal councils. Though it did not have enough time to secure any spectacular achievements, the ACUM-led executive managed through its imperfect example to raise society's expectations, against which future governments will be assessed.

It's Bad Governance, Stupid!

Foreign policy is often considered to be the main dividing line between political parties in Moldova. The short-lived PSRM-ACUM coalition proved this assumption wrong. The fundamental schism is between bad governance, which preserves the advantages of the few, and good governance, which society increasingly craves. This unprecedented coalition had the chance to transcend that divide and push for reforms that would have put in motion processes leading to better governance.

PSRM failed the test when the coalition's agenda reached justice reform. The need to have a controllable prosecutor general to guarantee the immunity of the party's leader and its members from criminal investigations ultimately prevailed. The coalition was on the verge of collapse in September, when PSRM insisted on provisos that would ensure the president would have a say in the early stages of the preselection process of the next prosecutor general. It is worth noting that it is the president who signs the decree appointing the prosecutor general. PSRM wanted to exclude any "dangerous" candidates from the short list, and to this end, President Dodon pushed to have his man in the selection commission. ACUM reluctantly agreed to a compromise formula devised by international partners, under which the speaker of the parliament — a position occupied by Zinaida Greceanii from PSRM — would delegate a member to the selection commission.

The fundamental schism is between bad governance, which preserves the advantages of the few, and good governance, which society increasingly craves

This amendment proved fatal to the ruling coalition. The long-awaited selection process was a fiasco: according to the results published by the justice minister, the evaluation scores given by the commission member nominated by PSRM differed significantly from the scores provided by an independent international expert and a representative of civil society. The government cried foul and canceled the results of the selection process.

This case shows in no ambiguous terms that PSRM remains a prisoner of its meteoric but unhealthy political rise. This ascent was partly brought about by a rent-seeking partnership with DPM. For example, a Competition Council investigation revealed the existence of a cartel in the field of TV advertising between companies affiliated with Plahotniuc and Dodon. This information is just the tip of the iceberg of joint rent-seeking activities. PSRM's rise was also propped up by Russia's financial support, which is illegal under Moldovan legislation. In a secretly recorded meeting at DPM's headquarters last June, President Dodon explained that until April 2019, PSRM had received about $700,000 per month from Russia. It is worth noting that the president never denied the authenticity of the leaked video, though he said that his words had been taken out of context.

Both ingredients of PSRM's success make its leadership vulnerable in the face of an independent justice system. Without drastic renewal, bad governance is the only option available to the party. Cornered by ACUM to take a clear stance on justice reform, PSRM preferred to throw its coalition partner under the bus and instead revive its old partnership with DPM. The difference between now and June is that the balance has shifted in PSRM's favor, with the Democrats now playing the role of a junior partner.

Fragile Power

The history of independent Moldova is a cemetery of failed authoritarian projects that sought to monopolize and hold on to political and economic power. Every attempt to aggrandize power was met by a "coalition of the willing" which ultimately reversed the monopolist drive. This year, PSRM was part of such a coalition, only to later embrace the role of a political monopolist. It has not learned a lesson from the failed attempts of its predecessors.

On the surface, the party is doing well. It controls the Constitutional Court, the Anti-Corruption Center, the positions of parliamentary speaker and mayor of Chisinau, and soon will probably control that of prosecutor general. Moreover, despite claims of purely technocratic government, half of the PSRM-led executive is staffed with President Dodon's former advisers, endowing him with direct informal oversight. Thus, PSRM has managed to accumulate an impressive amount of institutional power. But this concentration of power brings not only advantages, but also greater responsibilities and vulnerabilities. With a year to go before the next presidential elections, Dodon and his party's aptitude to govern will be seriously tested. Failures and mistakes will negatively impact his chances of being reelected.

With winter fast approaching, the immediate concern is to find a way of securing gas deliveries in case Russia's Gazprom and Ukraine's Naftogaz fail to agree on a new gas transit contract or prolong the old one, as Moldova relies on gas imported from Russia via Ukraine. It looks like negotiations between Kiev and Moscow will go into overtime (beyond January 1, 2020). In these circumstances, whatever the solution is for Moldova, it will be linked one way or another with Ukraine: the only route through which sufficient quantities of gas can so far be received. But it will not be easy for the PSRM-led government to find a solution. In a 2016 interview, Dodon argued that the 2014 "referendum" in Crimea on joining Russia — considered illegal by the international community — "respected legislation," and blamed Ukraine for the situation on the peninsula. In spite of Dodon's efforts to backpedal and belatedly reaffirm respect for Ukraine's territorial integrity, no senior Ukrainian official has met with him to this day. Given Dodon's record of questioning the territorial integrity of Ukraine, he will need all the diplomatic skills available to him to reach out and secure Kiev's cooperation on energy issues. Failure to do so could be disastrous for PSRM. Over 40 percent of private consumers and 70 percent of industrial enterprises in Moldova rely on gas.

The history of independent Moldova is a cemetery of failed authoritarian projects that sought to monopolize and hold on to political and economic power

The next urgent item on the table is uninterrupted financial support from the EU, on which Moldova's macrofinancial stability and economic growth heavily rely. The EU provides 80 percent of investment, absorbs 66 percent of Moldova's exports, and allocates over 80 percent of all the international grants that Moldova receives. PSRM will need to keep the door to Europe open, but its starting position is not so strong. In a social media post in October, the new prime minster, Ion Chicu, blamed the EU for the precarious situation in Moldova, and accused high-ranking EU officials of being accomplices to a major bank fraud scandal there (a message he later deleted), meaning he is probably not the best person to keep that door open.

The EU has learned two important lessons in Moldova. The first is related to the application of conditionality, namely "less for less" and "more for more." Since 2015, the EU has gradually halted financial assistance to Moldova as the government stalled on reforms it voluntarily promised to implement. The EU focuses more on policies and less on declarations. The second lesson is related to the speed of actions. The EU is often described as a slow power, but this summer, as the new government took shape in Chisinau and rebooted the reform process, the EU was able to match political will for transformation with a substantial financial package, comprising macrofinancial (a first tranche of 30 million euros) and sectoral assistance (55 million euros).

Should the new government fail to meet the conditions for the subsequent tranches, the "less for less" principle will be swiftly reactivated. This possibility was confirmed by Olivér Várhelyi, the candidate for the post of Commissioner for European Neighborhood Policy and Enlargement Negotiations, during his confirmation hearing in the European Parliament. The EU intends to avoid stepping on the same rake twice. Most probably, the way this government acts on justice reform, unbundling in the energy field, and the selection of the new prosecutor general will be the litmus tests for the EU.

The urgent issues of policies will overlap with politics. The PSRM-led government is dependent on the votes of thirty DPM deputies. DPM, in turn, might be inclined to weaken its partner in order to increase its bargaining power. In a recent interview, the secretary general of DPM pointed out that the party has enough votes together with ACUM to bring PSRM's government down if the latter does not deliver. In this context, he also hinted that DPM had learned for itself how bad an overconcentration of political power can be. Aware of this vulnerability, PSRM may try to acquire the missing number of votes by cannibalizing DPM's faction. This is exactly what Dodon feared Plahotniuc would do to his party. The president could assume that there is now fertile ground for such inroads to be made against DPM. Plahotniuc's departure exposed deep internal fissures, with several rival groups emerging inside the party. Despite these divisions, however, DPM has managed to stay together and performed well in the last local elections, boosting its morale a little. Should PSRM try to swallow it up, DPM might quickly form a situational coalition in parliament with ACUM in order to bring down the government.

What Could Go Wrong?

With presidential elections rapidly approaching, Moldova's politics will remain volatile. It is difficult to predict or anticipate all the political twists with a destabilizing potential. Still, there are two factors that could make politics more turbulent.

First, one of the hallmarks of Dodon's presidency is his pledge to solve the Transnistria conflict. As a leaked video showed, the agreement negotiated with DPM in June 2019 included, at Russia's initiative, an item on the federalization of Moldova (disguised under a different formula) as a way to settle the conflict. In the last two weeks, Moldova's president has renewed dialogue with the Transnistrian leadership, and met twice with the leader of the breakaway region, Vadim Krasnoselsky, in the space of several weeks.

As PSRM has seized control over the government, President Dodon might renew his push to intensify negotiations between Chisinau and the Transnistrian capital Tiraspol on finding a political solution. As reforms are likely to stall in Moldova, he might then advertise (even minor) progress on the Transnistrian front to European leaders as an area in which competition with Russia can be turned into cooperation. But for this to happen, Moldova's government will ask for continuous economic support.

In other words, Dodon could try to leverage his conflict resolution activity to secure financial assistance from the EU without delivering on reforms. A similar strategy was tested under DPM, and could inspire PSRM to try it again. However, a major segment of Moldovan society does not perceive Dodon as an honest negotiator who defends the national interests of Moldova. This perception has been reinforced by the tapes in which he discusses the federalization of the country. In addition, there is no consensus in society on how to settle the long-standing conflict in Transnistria. Therefore, an attempt to speed up the resolution process is likely to spark significant public protests and make the situation more volatile.

Moldova's politics will remain volatile. It is difficult to predict or anticipate all the political twists with a destabilizing potential

A second potential flashpoint could be next year's presidential elections. Governance tends to erode public support for those in power. If the PSRM government underperforms, the popularity of President Dodon could slump too, undercutting his chances of winning. In the presidential contest he is likely to face the recently ousted former prime minster Maia Sandu, who enters the political battle from higher moral ground: one who advocated while in government for an independent prosecutor general and unblocked international financial support.

Anticipating a close race that he might lose, the outgoing president could try to play not by the rules, but with the rules. For example, PSRM could try to use the constitutional court to perform a legal maneuver and return the country to a system in which the president is elected by parliament. In 2016, the constitutional court canceled constitutional modifications enacted in 2000, thereby reestablishing the people's right to elect the president directly. Another "innovative" legal argument with far-reaching political consequences is, therefore, always a possibility. Together, PSRM and DPM have enough votes to elect the president under the old procedure (61 votes are needed). In this case, PSRM would need to either absorb DPM's faction completely or strike a more advanced power-sharing deal with them. The opposition will most likely challenge such abuse by mobilizing massive street protests.

By manipulating institutions and rules, Transnistria could also be part of the "solution," if elections are held in line with current legislation. The presidential contest is expected to be a very close race in which every vote will count. In 2016 the difference between first and second place was only 67,000 votes. To tip the balance in PSRM's favor, Dodon could resort to voters from Transnistria, who are legally Moldovan citizens and therefore have the right to vote. The separatist leadership prevents the opening of polling stations in Transnistria, so voters have to cross to the right bank of the Nistru River to be able to exercise their right to vote. This cannot be done without an informal agreement between Chisinau and Tiraspol and the centralized transportation of voters.

Dodon's victory in 2016 was partially the result of the well-organized participation of 16,000 voters from the left bank of the Nistru who overwhelmingly voted for him in the second round. Due to the informal PSRM-DPM alliance, the role of the population of Transnistria in elections kept growing. In 2019 parliamentary elections, 40,000 voters from the breakaway region cast their votes. This electorate could play a decisive role in determining the winner of presidential elections in 2020.

The problem is that these votes are for sale. In 2019, Promo-Lex, an authoritative Moldovan NGO that monitors elections, reported the organized transportation of voters from Transnistria and the distribution of money after voting. The price of one vote was reportedly $20. This might be a low-cost solution to win what promises to be a highly disputed election. Such practices on a bigger scale in 2020 risk undermining the legitimacy of the final outcome of elections. And if victory is challenged on the streets of Chisinau, Moldova may rapidly descend into post-electoral turbulence.