On August 27, the Republic of Moldova celebrated 25 years since gaining its independence upon the 1991 breakup of the Soviet Union. 

One journalist called the milestone a “quarter-century of solitude,” recalling the political and economic struggles Moldovans have endured ever since. The challenges Moldova has faced during its post-Soviet transition are not unlike those of other former communist countries. But, like other nations that find themselves on geopolitical fault lines, Moldova’s successes and failures are never entirely of its own making. In particular, the financial and political scandal that has unraveled during the past two years has exposed the depth of state capture but also the degree of complacency shown by Moldova’s foreign partners.

What should have been a big celebration of liberty, democracy and resilience in the face of adversity was actually a reminder of the stagnation and corruption Moldova has suffered since independence. But this year also brings some hope. In just a few months, Moldovan citizens will directly vote for president for the first time since 1997. The elections have an important stake as they will determine whether the country will continue its democratic development under new and truly reformist leadership or sink deeper into corruption and poverty. Emotions will therefore run high, both inside and outside of Moldova’s borders, and so will the impact on Moldova’s future and on regional stability.

The anniversary was also marred by a debate among various analysts in both the Republic of Moldova and Romania regarding the idea of reunification between the two countries. Spurred by a speech by James Pettit—the U.S. ambassador to Moldova—the debate triggered populist sentiment in both countries. Yet historical realities aside, the emotions and symbols of nationhood should not obliterate Moldova’s acute problems with rule of law and government legitimacy. If Moldovan citizens are to fully enjoy their independent and democratic state, then the debate should be more about building effective rule of law and cleaning up what seems to be a deeply corrupt system of government.

But where to begin? A good place would be Moldova’s banking crisis of 2014, which made world headlines after $1 billion—equivalent to 12 percent of the country’s GDP—disappeared from the banking system, sending the country into a deep economic and political crisis. After almost two years of controversy, reports and revelations of all sorts, there are recent allegations that the investigation into this fraud and money laundering scandal. If true, this offers hope that the case will be resolved soon.

While Moldova’s billion-dollar theft did not create as much of a stir as the Panama Papers, it does point to deep problems with how the global financial system is structured. In short, money laundering, fraud and corruption in the Moldovan case (and not only) were possible with the complicity of private institutions in western (read rule of law based) countries, like the UK and Latvia. This undercuts the legitimacy of the anti-corruption speech transmitted through diplomatic channels, giving way to suspicions of hypocrisy on behalf of international donors and partners. It also undermines the investment by local and overseas agents committed to fighting corruption and supporting democracy and prosperity for Moldovan citizens. And this is not unique to Moldova.

In 2012, according to Global Financial Integrity, for every dollar developing countries received from development assistance funds, $10 flowed out illicitly. Moldova ranked 79th of 149 countries on the list, with an annual average of $908 million in illicit flows from 2004 to 2013. By the time of the next GFI report, Moldova will have likely surpassed many other developing countries in the study. Over the years, various international fora, including the G20 and the UN (in its most recent Sustainable Development Goals) discussed ways to limit or prevent illicit money flows and cross-border corruption. However, GFI says annual illicit money flows have increased by an average 7 percent a year from 2004 to 2014, amounting to 5.9 percent of GDP for Europe’s developing countries. Looking at the way in which money flows in these illicit transactions, it is not too difficult to make inferences about the role of great power politics and subversion in the post-Soviet space.

The proper celebration of post-Soviet independence will come when law enforcement authorities in both developed and developing countries no longer tolerate massive corruption and money laundering scandals. In Moldova’s case, it is obvious that local authorities lack the capacity and independence to effectively deal with these matters on their own. Finding out the truth about the $1 billion theft, punishing those responsible for it and returning all assets to the Moldovan state would be the best anniversary gift for Moldova’s citizens.


Europe's Edge is an online journal covering crucial topics in the transatlantic policy debate. All opinions are those of the author and do not necessarily represent the position or views of the institutions they represent or the Center for European Policy Analysis. 


Corina Rebegea

31 August, 2016

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