Original Russian version is here

The chronicle of governments*

On the eve of creation of the new Government, its program, organizational structure and persons involved, it's time to look back: how was it for the predecessors? What patrimony they have left?

They speak, that the history goes on in spiral. The chronicle of governments of Republic Moldova is not an exception, though all happens here much too quicker - each turn takes about one year. Western "advances" are replaced by wind "from east", liberal views – by conservative ones. Although, the circle of persons involved "in ruling", is usually limited, and, probably, time will be required, that it is refreshed, at last, by new generation.

Government of Druc, May 1990 - June 1991

On the dawn of "perestroika" the last Supreme Soviet of Moldovan Soviet Republic was elected. It has gathered in May, 1990. And the majority in it were oriented towards radical and fast changes. But for the position of Premier the deputies did not find a local "radical", and thus with a majority they have elected Mircea Druc – he then in Moscow was studying Latin philology, afterwards he studied at H. Popov's Chair in Moscow State University the art of management, and he later joined the Popular Front.

It was Druc who suggested to call the country "Republic of Moldova", so that it differs from the other Moldova – on the other bank of river Prut. He also made order with Communist Party's property: he gave the buildings to courts, science and children. Then he gathered directors of enterprises working for USSR and told them: "I don't need you!". Then he gathered State Planning Committee and said: "So, this is that force, which slows down the transition to market economy" etc. And the drain of specialists started.

Mircea Druc was the first to reorganize state apparatus: number of ministries and departments was reduced to 16. However, also began the so called "cumatrism" (Romanian: people promoting relatives in job positions): state minister became his cousin... There was no problem with personnel because all were in a big euphoria. The only thing that counted was that "it's better to have our boys in place – honest and worthy guys". However, there was no corruption in today's scale –conscience was still holding the people.

Upon submission of Government, through Parliament, the "first wave" of laws with market orientation has passed. A lot was copied from the Romanian legislation and from popular at the time the Baltics. These laws were in many respects too declarative: regarding the property, local self-administration, bankruptcy, tax reform. But the main thing was said: from plan to market! The Program of socio economic development of village was also approved, which remained on paper. On the other hand, then the land Code was accepted, which was consequently updated, but has survived.

The first "Program of transition to manageable (!) market economy" was adopted in the autumn of 1990. Among others, its preamble said: "the transition to market economy will be difficult, but will take no more, than one - 1,5 years". And 40 people wrote in good moods this program in Holercani (region famous for its resort places for officials)...

Druc's government was also the first to raise the question about integration of the territorial-administrative system of the country (i.e. to make bigger administrative units). But in the foreground was the politics – aiming at destroying the Soviet party nomenclature in the field, because in every district or town there were 300-500 such persons. Three variants were offered: 9, 12, 24 districts (elaborated by the research institute of Planning and the Department of local administration of the Government). The idea was to take into account the historical factors, as well as demographic, natural, economic specialization, labor gravitation etc. But – nothing was about national criterion! The project has remained non-realized.

There were also thoughts about the national currency: to convert it to "silver". This was suggested by professor Rugina, US national born in Basarabia. All ended in prose - in 1990 upon Government's proposal, enterprises and organizations have input considerable amounts in rubles to defend the territorial integrity, and the largest part of these funds ended up outside this very territory.

The first visit as a Premier, although informal, Druc was to Rome, on a plain "Volga" car. In memory of this event we see the she-wolf before the History Museum. While the first economic oriented visit was done by the minister of supply of materials Constantin Iavorschi – to Burundi, Central Africa.

After returning, he was telling on TV that Burundi badly needed our wines, textiles and metal for construction, while we needed their coffee in grains and papaya. This papaya thing then became a commonly used funny phrase.

Government of Muravschi, June 1991 - June 1992

There were many undertakings by the first Government, but the explosive character of the Premier, absence of compromises, including in the field of the interethnic relations, have led to a renewal of the Cabinet. Parliament appointed as Premier the more tolerable Valeriu Muravschi, former minister of the finance. A key figure of the second Government – was Gheorghe Efros, Vice-premier, chief of the Committee for economic reform. New style of the Cabinet – were discussions. One of its results – was creation of Academy of economic studies (first rector – prof. P. Bran, from Bucharest).

This government did not take too revolutionary measures, much was developed by inertia, economy and ruble rolled down. However searching for a "own path" never stopped. One of the outcomes– was creation in June, 1991 of the National Bank and arrival from Leningrad of its governor. Preparation for introduction of the national currency started.

In the same time, for the first time in Moldova, as well as in entire post-soviet space, have arrived methodologists "from outside". It is curious, that in the first missions there were also graduates of Moscow University of People's Friendship named after P. Loumoumba, who were taught to planning in Moscow, but later they arrived to orientate us towards the market.

During President Snegur and Premier Muravschi started the movement of Moldova towards international organizations: in 1992 it entered the United Nations, IMF and International bank of reconstruction and development.

The government of Muravschi stood for one year. It was a difficult and tragic year - blood in Transnistria and splitting of the country, downfall in economy. Bitter statistics of 1992: inflation - 1200 %, deficit of the budget - 22 %, recession in an industry - 27 % and in agriculture - 16 %. A massive stoppage of enterprises, unemployment, depreciation of deposits in Savings Bank, rise in prices.

A change of government was imminent. Right wing submitted Mircea Rusu (an industrialist from "Moldavhidromas", and also secretary of district communist party cell), and left wing – Andrei Sangheli, agrarian, deputy chairman of council of ministers till 1990. The parliament chose Sangheli by virtue of its economical thinking and pressing circumstances (discontinuance of gas, transport blockage, loss of the traditional markets etc.). And the wind from the East began to dominate over gusts from the West.

With arrival of the third Government started the strife for macrostabilisation and resumption of economic growth. The long-living premier Sangheli was allocated by destiny four and a half years… 

Two governments of Sangheli,
                     June 1992 - April 1994 - February 1997 

Period of two Sangheli governments under the presidency of M. Snegur will enter our history as a beginning of coordinated (first of all, with the help of IMF and World Bank) actions for entering the market economy.

In the beginning of this path a hand was also offered to Transnistria: for example V. Repkin, presently  chairman of Tiraspol executive committee, was chosen as minister of finance, but the plate with his name hang in the Ministry of finance for about one month and he didn't come...

The legal and organizational preparation of reforms impresses: the first program of stabilization (1993), introduction of the Moldovan Leu (there were variants: taller, dinar), laws – regarding support of small business (1994), restructuring of industrial enterprises (1995), free enterprise zones (1996), first credit auctions, mass privatization of enterprises and housing, cancellation of limitations on export and import, increase of salaries and pensions, introduction of compensations etc. We have shown an example to Europe also in solving a regional conflict: through referendum (1994) and law (1995) have established Gagauz-Yeri. We came out to Danube with the construction of oil terminal.

IMF, World Bank, as well as Russia, fuelled Moldova with credits (and by 1997 the external debt has exceeded 1 bn dollars), while the famous "The Economist" (London), a magazine with a almost 200-year history, has called in March 1995 Moldova "as a country of sound reforms, by its size most suitable as a laboratory". First among CIS countries Moldova was accepted in Council of Europe (1995).

Premier  was working easily, as the President had the right to issue "working" decrees, and in the second Parliament the majority of agrarians and socialists was permanently supporting the Government, which gradually fuelled with ideas and draft laws the Coordination council for economic reform.

However, miracle did not take place. In spite of the fact, that for 1994-1995 "the plan on macrostabilization" was successfully executed (inflation was defeated, the Leu was stable, the deficit of state budget was not so large), the economic growth did not start. Following the canons of liberalization, the state practically went away from the economy, creating for it only the "institutional base".

The state property (in 1989 it was 86 % of country's fixed assets) suddenly became ownerless and in conditions of mass privatization, similarly with cooperative-collective-farm property, started to be massively plundered. Having recognized in the new Constitution (1994) private property and entrepreneurship as driving forces, the state, nevertheless, did not stimulate them with taxes, credits, protection. The business, generally, has gone into the shadow economy, and the capital – went abroad. Although, a part of it) afterwards has come back as investment from Liechtenstein and Malta.

The structural reforms under the influence of Parliament were slowed down. In industry a group of 40 enterprises supported by ARIA began restructuring, but in agriculture the delay of reforms has only prolonged agony of collective farms and state farms: 490 of them in 1996 were loss making.

Gradually the corruption began to take the scale of a national disaster. As fertile soil for it were - pseudo-legal privatization, non-transparency of import of energy resources, vacuum of state power in territories - in districts and municipalities, actions of new monopolists such as "Moldfarm", tax amnesties and writing offs of taxes to the budget, tax exemption of firms assisting Olympic events 1996, metropolies etc. The first blow which affected image of Moldova: disruption of arrangement of Government with the tobacco giant British-American Tobacco in favor of some unknown Reemtsma (also without money, as soon was discovered). Social situation and political instability, in the meantime, kept aggravating.

For the course of reforms the year 1996 became fatal, when political favoring and group interests have blown the economy, the Government got involved in presidential elections, which were lost by the Premier, and soon the ruling agrarian-democratic party has left the scene. 

Two governments of Ciubuc,
                     February 1997 - May 1998 - March 1999 

In his position as the President P. Lucinschi began the term with the Decree "On pressing measures for improving the socio economic situation" (Jan. 1997). The task set was to clean up the "dead end" of debts on salary and pensions, low payment discipline of economic agents, imperfection of taxation, debts for energy resources and numerous delinquencies.

Remaining devoted to the market, Premier I. Ciubuc attempted to make order in the  situation, first of all, by administrative methods. Branch-oriented programs were elaborated, though having no financial support. More rigidly meetings of Government were conducted. Number of vice-premiers was reduced, for the purpose of strife with familiarity doors of members of Government had only titles and positions on them, while names were taken out. State agencies for attracting foreign investments, and on state purchases, were set up. Realization of the law "On public service" started.

After successful negotiations with World Bank (May 1997) regarding the $100m credit for structural transformations (SAL-II), the Government began campaign for increase of tariffs on electricity, heating, and price for gas. Pickets on central city's square appeared.

More laws were adopted, especially regulating financial sector. System of arbitration was replaced by economic court. The first swallow of agrarian reform – was reorganization of 70 collective farms, heading towards the National program "Land" in 1998. Parliament, in the meantime, blocked "the second wave of market laws" (regarding sale and purchase of land, on pension reform, on bankruptcy etc.). Action from the President (June 1997) was required, under the threat of Parliament dissolution.

For the first time statistics of the totals of 1997 indicated a GDP growth of 1.6 % and lowest inflation ever – 11.8 %. The external debt, though, reached 52.4 % of GDP, and internal – 9.6 % , while trade balance showed a deficit of $348m. Budget crisis could not be overcome. Tax collection did not exceed 70 %, and for servicing the state debt 10.4 % of budget expenditures were used, and for capital investments – 6.6 %.

The second government of I. Ciubuc, with personnel filling and with operating activity dictated by Parliament, has tested the bad-luck algorithm "2+2+1", when professionalism and logic were replaced by the criterion of party affiliation. Although the year 1998 was declared as year of struggle with corruption (one of actions was halt of activity of free enterprise zone "Expo-Business-Chisinau"), manifestations of administrative and clan interests were outrageous – when customs warehouses were created, when prices were set on wheat for state needs, when function of state property management was transferred to branch ministries, when foreign cars were imported for state officials etc.

By the end of the first half of 1998 the state budget in essence has collapsed, revenues were executed only at 33%, revenues of local budgets sharply reduced, constituting only 27% of the total consolidated budget revenue. More than 50 % of the budget was consumed for current payments and settlement of debts for salary and pensions, for purchases of energy resources and state debt service.

The period of "stable depression" installed in Moldova since mid-90s, was blasted by financial crisis in Russia. Its consequences were felt both by the country, and by economic agents, and by population. Foreign exchange reserves of the NBM dangerously fell by about 3 times at the end of 1998, the Leu has depreciated by 78 %, state budget revenues fell sharply. Between that, only half a year before, the Government approved the program of anti-crisis measures, first of all, in social sphere... 

Government of Sturza,
            March 1999 - December 1999 

Peculiarity of this Government was that for the first time it rested on the parliamentary mandate of the Alliance for democracy and reforms, called "Program aims and priority actions of the governmental coalition" signed by M. Snegur, D. Diacov, V. Matei, and I. Rosca. Only 2 pages and 12 bullets: actions in the budget sphere, making order in export-import transactions and customs control on Nistru river, rescheduling of external debt, acceleration of structural reforms in agriculture and energy sectors, privatization of tobacco and winemaking enterprises, actions in social sphere (pension reform, liquidation of privileges with introduction of compensations); administrative and territorial reform; realization of balanced foreign policy with a clearly set objective - integration into Europe.

The program of Government was written by I. Sturza, A. Muravschi, A. Arapu plus V. Solonari, and they were the ones who implemented it with favorable support from IMF, World Bank and European partners. In CIS summits Moldova was marked by a young and English speaking team, although showing arrogance - a fact which spoiled many times their relations with the President.

Much from the Alliance's Program was "put in production" by the Government: default was avoided, GDP decline was slowed down (-3.4% in 1999 against -6,5 % in 1998), managed to "strangle" the system of reciprocal clearings, accelerated the "Land" program and started the administrative-territorial reform, improved the trade balance with a an increase of share of export - import with countries of European Union, managed to hold the growth of the external debt. The government has taken up the impact, insisting to start the pension reform and to cancel the privileges, an action being prepared since 1995, but continuously postponed. NBM's foreign exchange reserves have grown, however the exchange rate of Leu at the end of year fell to 11.59 Lei/1 dollar, the inflation was 43.8 % (highest after 1994), and dollarization of deposits I commercial banks for the first time has exceeded 50%.

Attempts to recover the real sector and revive the entrepreneurship proved to be not so efficient (strangely, though, since I. Sturza proved to be a good businessman before becoming Premier), shadow economy equaled the official one. The operations, realized on a criminal base, got such a wide scale, that the Government's almost last decision was approval of the "State program on fighting organized crime and corruption" (November, 1999).

The cause of the forced resignation of Sturza team was dissolution of the Alliance for democracy and reforms and claims towards him and his team  that they were playing too much with macroeconomics instruments being afraid to do rough work at "low" level – at enterprises and with the population. 

Government of Braghis,
            December 1999 - March 2001 

The year 2000 began dramatically: after the cabinet crisis (November - December) and refusal of Parliament to privatize wine-making and tobacco enterprises, that was stipulated by the Memorandum of the previous Government with IMF/World Bank, Moldova faced real threat of default and social shocks.

After Messrs. V. Bobutac and V. Voronin failed to be approved by the Parliament, the third candidate to the Prime Minister post became D. Braghis, and since December 21 his Government,  with a program similar to the one of the predecessor, has started work under the patronage of the President, and later of the Parliament, which, after the transition to parliamentary republic, after  July 5, 2000 should have demonstrated efficiency of its work.

The year was difficult: Government had to face the both political challenges (absence of "own" majority in Parliament, May rallies on main city square - students and war veterans), and financial challenges (discontinuance of support from IMF and World Bank), and nature-linked (drought, showers, ice).

To the honor of the Government, it has held a situation under a control, to what greatly contributed everyday optimism, organizational skills and rapid responsiveness towards "external influence" of the Premier, and also smooth operation of the economic block - Ministry of Economy and Reforms (A. Cucu), Ministry of Finance (M. Manoli) and, as usual, National Bank (L. Talmaci).

They managed to come to the end of the year with dignity: with a GDP growth (1.9 %) and a growth in industry (2.6 %), with a large reduction of debts on pensions and wages, servicing the obligations on external debt, maintenance of moderate inflation rate and exchange rate stability, as well as improvement of tax collection. The whole being said, it should be noted that 31% of the increase in budget revenues had an inflationary component.

For a perspective the Government approved a number of strategies – regarding socio economic development of Moldova till 2005, on fighting poverty and on economic growth, on separate problems and branches. However, the aged troubles remained: non compliance with the laws, unfavorable investment climate and weakness of export base, negative trade balance, growth of internal debt, self-destruction of systems of public health services and education, corruption and expansion of poverty. Plus a new phenomenon - massive outflow of people for work abroad. And now "The Economist" (July 2000), which only five years ago named Moldova as "laboratory of right reforms", publishes a pitiful article "Can Moldova get worse?".

This was the fourth government with the President P. Lucinschi. According to the common opinion, D. Braghis quite "corresponded to the position he had", although he still could not leave the "shade of the big man". 

New government, April 2001 -... 

For the new Government financial possibilities are sharply narrowed, referring to the choice of socio economic policy and methods of its practical realization. Inheritance received from the predecessors depresses: a huge external debt, inefficient economy, massive poverty, professional weakness of state apparatus, also affected by the "virus of temporary status".

What can new authorities oppose to this? If we look into the draft program of the candidate for Prime Minister V. Voronin (Dec. 1999), then we see: "strengthening of statehood, increase of efficiency of public management, recovering of territorial integrity of the country", "maintenance of continuous state regulation of the market economy", "stoppage of falling of population's standard of living, fighting with poverty and unemployment, reduction of discrepancy between the incomes of different strata of population", "stimulation of the processes of integration in international and regional structures", "fight with corruption and organized crime".

At first, apparently, the floor will be given to actions not requiring financial expenses (civil consent, active capacity of state apparatus, Transnistria, tax collection, making order in customs and tax inspectorate, legitimacy of privatization, suppression of corruption). Afterwards long-term actions may follow - support of domestic manufacturers, revival of the system of state purchases etc.

But for this time is needed. In the meantime, right ahead – there is the "debt hole", dug by the predecessors. Till the end of 2001 it is needed to pay back not less than $100m of external debt, and in following year - twice more. And in this situation, Moldova similarly to baron Munchausen will not be able to drag itself out of the bog by the hair. While continuation of cooperation with international financial organizations, surely, is possible only at a reasonable, in the opinion of both parties, solution of the problem with coordination of freedom of the market and regulationary role of state.

It is possible, that the coming years will be very dramatic for the country. If in 90s the fall of production and of social standards was compensated by "wasting" the previously stored national wealth, then a decade of degradation led to exhausting of all resources of the productive sector, stagnation of science and education, deterioration of cumulative health of population and destroying of social infrastructure a system.

The hope is that the leaders and population of the Republic Moldova, as a democratic state which made the choice in favor of political plurality, civil consent and socially oriented market economy, will finally agree upon what country Moldova shall be and what are its long-term interests. Due to the community of historical fates of its population and geopolitical advantages of the country on the junction of Central Europe, Balkans and CIS, the Republic Moldova is quite able to realize the model of "small open economy" in conditions of a state which is politically stable, neutral and attractive to cooperation.   

Table: Number of Governments and Quality of Governance

A. Gudim, 28 March 2001

Also published in "Chisinau Observer" weekly newspaper

* Computer translation from Russian language with some editing