Order Code RS21981
Updated March 8, 2005
CRS Report for Congress
Received through the CRS Web
Moldova: Background and U.S. Policy
Steven Woehrel
Specialist in European Affairs
Foreign Affairs, Defense, and Trade Division
Summary
This short report provides information and analysis on Moldova, including its
political and economic situation, foreign policy, and on U.S. policy toward Moldova.
For more background on Moldova, see CRS Report 95-403, Moldova: Basic Facts, by
Steven Woehrel. This report will be updated as events warrant.
Political Situation
Although a small country, Moldova has been of interest to U.S. policymakers due
to its position between NATO member Romania and strategic Ukraine. In addition, some
experts have expressed concern about alleged Russian efforts to extend its hegemony over
Moldova through various methods, including a troop presence, manipulation of
Moldova’s relationship with its breakaway Transnistria region, and energy supplies.
Moldova’s political and economic weakness has made it a source of organized criminal
activity of concern to U.S. policymakers, including trafficking in persons and weapons.
Moldova is a parliamentary democracy that has held largely free and fair elections
since achieving independence from the Soviet Union in 1991. In the most recent
parliamentary elections on March 6, 2005, the Communist Party of Moldova (CPM) won
a majority of 56 seats in the 101-seat parliament. The Democratic Moldova Bloc (DMB),
an alliance of small centrist groups headed by Chisinau mayor Serafim Urechean, won 35
seats. The nationalist and pro-Romanian Christian Democratic Popular Party, headed by
Iurie Rosca, won 10 seats. Observers from the Organization for Security and Cooperation
in Europe (OSCE) said that the vote was carried out generally in line with OSCE, Council
of Europe, and other international election standards. However, the OSCE and other
international organizations criticized Moldova for biased electronic media coverage,
misuse of government resources in favor of the CPM, and harassment of opposition
candidates and independent non-governmental organizations during the election
campaign.
One important task that the new parliament will undertake is to try to elect
Moldova’s President. The Communist Party lacks the constitutionally mandated
supermajority of 61 seats to re-elect CPM leader Vladimir Voronin to the post. If the
Congressional Research Service ˜ The Library of Congress

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parliament is deadlocked on the choice of a new president, new parliamentary elections
will have to be held. Although the Democratic Moldova Bloc and the Christian
Democrats have vowed to block Voronin’s re-election, some Moldovan analysts believe
that the Communists may be able to secure support from elements in the heterogeneous
DMB.
Transnistria. Conflict between
Figure 1. Transnistria and Gagauz Regions
Moldovan forces and those of the
breakaway “Dniestr Republic” (a
separatist entity proclaimed in 1990 by
ethnic Russian local officials in the
Transnistria region of Moldova) erupted
in March 1992. Over 300 people died in
the violence. A cease-fire was declared
in July 1992 that provided for Russian
and Moldovan peacekeepers to patrol a
“security zone” between the two regions.
The causes of the conflict are complex,
involving ethnic factors and, above all,
maneuvering for power and wealth
among elite groups. Ethnic Russians
and Ukrainians together make up 51% of
Transnistria’s population of about
650,000, while Moldovans are the single
largest ethnic group, at 40%.
Many analysts are convinced that a
key factor obstructing a settlement is the
personal interests of the leaders of the
“Dniestr Republic” and associates in
Moldova, Russia and Ukraine who profit
from illegal activities that take place in
Transnistria. These activities include
illicit arms sales, human trafficking and smuggling. The 2004 State Department human
rights report sharply criticized the “poor” human rights record of the “Dniestr Republic,”
noting its record of rigged elections, harassment of political opponents, independent
media, many religious groups and Romanian-speakers.
Negotiations over the degree of autonomy to be accorded the Transnistria region
within Moldova have been stalled for many years.1 The two sides have negotiated over
Transnistria’s status with the mediation of Russia, Ukraine and OSCE. This process has
resulted in proposals for a federal Moldova, in which Transnistria would have great
autonomy. Nevertheless, Transnistrian leaders, apparently satisfied with the present state
of affairs, have blocked any agreement. Frustrated by the impasse, Moldova and Russia
1 Another potential secession issue was defused in 1994, when the Moldovan parliament adopted
a law establishing a “national-territorial autonomous unit” for the Gagauz minority. The region
has its own elected legislative and executive authorities and would be entitled to secession from
Moldova in the case of Moldova’s reunification with Romania.

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bypassed the five-sided talks and produced a draft agreement in November 2003 that
made large concessions to the “Dniestr Republic.” The draft contained “transitional
provisions” that would have allowed the “Dniestr Republic” to veto federal laws and
international treaties through 2015. Moldovan leaders appeared ready to accept the
agreement, reportedly because of alleged Russian assurances that the Transnistrian
leadership would be replaced. However, Moldovan President Vladimir Voronin decided
not to sign the accord due to heavy pressure from officials from the OSCE, the United
States and the European Union, who warned him that the proposal would threaten
Moldova’s sovereignty and would hurt future efforts toward European integration. The
Russian plan collapsed, and there has been little progress toward a resolution since then.2
In summer 2004, tensions rose between the Moldovan government and the
Transnistria authorities. Transnistrian leaders harassed and closed Moldovan-language
schools in their area that use the Latin (as opposed to the Cyrillic) script. Moldova has
blocked export certificates for the legal export of goods from Transnistria. Transnistrian
leaders briefly threatened to mobilize their forces, claiming the threat of an invasion by
Moldovan troops, which the Moldovan government denied.
Economy
Moldova’s per capita Gross National Product was $590 in 2003, the lowest in
Europe. Living standards are poor for the great majority of Moldovans, with an average
monthly income of $30. Many are dependent on remittances from the hundreds of
thousands of Moldovans working abroad. Moldova’s main natural resource is its rich
soil. Agriculture, especially fruit, wine and tobacco, plays an important role in Moldova’s
economy. Most of Moldova’s industry is located in Transnistria, and is not counted in
Moldovan government statistics. Moldova’s lack of control over its borders has severely
hampered its ability to collect customs revenue.
Moldova has had mixed success in economic reform. After independence, output
declined sharply and inflation soared, but Moldova pursued an IMF-supported program
of tough fiscal and monetary policies. It succeeded in achieving a measure of
macroeconomic stability, including the stabilization of Moldova’s national currency, the
leu. However, Moldova’s small economy is highly vulnerable to external shocks.
Moldova has privatized its small and medium-sized business sector, and it has had
success in privatizing agricultural land. The sale of large firms has been more difficult and
foreign investment in Moldova is low. The International Monetary Fund and other
international organizations have criticized the current, Communist, Moldovan government
for a lack of commitment to free market reform, especially its slow pace in privatization
and its failure to create a suitable business environment.3 On the other hand, the
Communists have succeeded in paying pensions on time, which has been a cornerstone
of the party’s popular support.
2 International Crisis Group, “Moldova: Regional Tensions over Transdniestria,” June 17, 2004,
from the ICG website [http://www.icg.org].
3 Economist Intelligence Unit Country Report: Moldova, August 12, 2004.

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Foreign Policy
Perhaps Moldova’s most important foreign policy relationship is with Russia. Most
of Moldova’s exports go to Russia, and over 90% of its energy imports come from Russia.
Moldova has accumulated large debts to Russian energy firms. Some analysts charge that
Russia’s behavior in negotiations over Transnistria have shown that Russia, while
nominally supporting Moldova’s sovereignty, has in reality used the issue to expand its
political leverage over the country. The Transnistria issue is complicated by the continued
presence of about 1,500 Russian troops in the breakaway region, as well as huge
stockpiles of weapons and ammunition. Russia has flatly refused to honor past
commitments it has made to the OSCE to withdraw its forces from Moldova. Russian
leaders have also attempted to condition the withdrawal of Russian troops on the
resolution of Transnistria’s status.4 Moldovan officials have termed the Russian
conditions on troop withdrawal as “blackmail.” Russia has responded with bitter verbal
attacks on Moldova’s leadership.
Both Moldovan and Russian officials agree that the tons of munitions in Transnistria
must be removed or destroyed before the Russian troops pull out, in order to prevent the
weapons from falling into the hands of criminals, terrorists and other undesirable groups.
However, Russian officials maintained that they could not withdraw the munitions
without the permission of the Transnistria authorities, who claim that the weaponry is
their “property.” A positive development was the conclusion of an agreement in May
2001 between the OSCE and Russia on OSCE monitoring and assistance for the troop
withdrawal, including the use of an OSCE trust fund to help dispose of the Russian
munitions. Several trainloads of munitions were withdrawn to Russia in 2003. However,
in late 2003, after the collapse of Russian-mediated talks on the Transnistria’s future,
OSCE officials complained that Transnistria officials began to block their efforts to verify
equipment further withdrawals. Russia supported the action of the Transnistria authorities.
After failure of the Russian-brokered draft agreement to solve the Transnistria
problem in 2003, President Voronin advocated reorienting Moldovan foreign policy away
from Russia and closer to the West. Moldova does not seek NATO membership but
participates in Partnership for Peace (PFP) exercises and favors increased cooperation
with NATO. Moldova currently has a partnership and cooperation agreement with the
European Union (EU), which provides for cooperation in a wide variety of spheres and
holds out the possibility of an eventual free trade agreement. Voronin has called for a
direct role by the EU and the United States in negotiations on solving the Transnistria
problem, viewing the current, five-sided format as flawed. In response, the EU has agreed
to appoint a special representative to deal with the Transnistria issue. Moldova signed a
cooperation agreement with the EU in February 2005 in the context of the EU’s new
European Neighborhood policy. Moldova even hopes to become a candidate for EU
membership as early as 2007, although the EU is unlikely to accept Moldova as a
candidate in the foreseeable future, due to many factors including Russia’s possible
negative reaction, Moldova’s lack of progress in reform, and the EU’s own internal
challenges.
4 Jamestown Foundation, Eurasia Daily Monitor, November 17, 2004.

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The victory of pro-Western and reformist Viktor Yushchenko as President of
Ukraine in December 2004 may provide a boost to Moldova’s foreign policy goals.
Unlike the previous Ukranian leadership, President Yushchenko supports Moldova’s
negotiating position on Transnistria. However, Ukraine could perhaps play an even
bigger role in resolving the issue if it shut down the lucrative black-market trade between
Transnistria and Ukraine, thereby increasing pressure on the Transnistria regime.
Moldova’s ties with Romania are a sensitive issue in both countries. Many
Romanians consider Moldovans in fact to be Romanians, and support the eventual
unification of the two countries. Although most independent experts consider the
“Moldovan language” to be Romanian, the issue is a matter of political controversy in
Moldova. After the incorporation of Moldova into the Soviet Union during World War
II, Soviet authorities promoted the idea of a separate Moldovan language (using the
Cyrillic rather than the Latin script), as a means of countering possible secessionist ideas.
Those favoring the term “Moldovan” tend to accept the Soviet legacy in Moldova, and
favor Moldova’s independence or close ties with Russia. Those persons favoring the term
“Romanian” support union with Romania. The Christian Democratic Popular Party
(which won 9.7% of the vote in the March 2005 parliamentary elections) advocates
unification with Romania, which it feels would cement closer ties with the West, but the
CPM-led government and most Moldovans oppose it. In a 1994 referendum, over 90%
of Moldovans rejected unification with Romania. However, more inhabitants of this
impoverished country may begin to favor union with Romania as Bucharest approaches
EU membership, which could occur in 2007.
U.S. Policy
The United States and Moldova have enjoyed good relations since the country’s
independence in 1991. The United States has attempted to support democracy and free
market reform in Moldova. In a speech in Bratislava, Slovakia on February 24, 2005,
President Bush proclaimed that “eventually, the call of liberty comes to every mind and
every soul,” and noted that Moldova’s March 2005 parliamentary elections gave the
country a chance to “place its democratic credentials beyond doubt.”5 After the elections,
U.S. officials said that the United States agreed with the OSCE assessment that the
election was generally in line with international standards, but with shortcomings in
several areas, including media access for opposition candidates.
The United States has tried to support the country’s fragile sovereignty and territorial
integrity by advocating the withdrawal of Russian forces from Moldova and for
negotiating a settlement of the Transnistria issue consistent with Moldova’s territorial
integrity. The United States has called for continued cooperation on weapons
proliferation and trafficking in persons. In May 2003, the United States imposed missile
proliferation sanctions on two Moldovan firms for transferring equipment and technology
to Iran. Transnistria has been a center for the trafficking of small arms to world trouble
spots. According to the 2004 State Department Trafficking in Persons report, trafficking
in persons is a “grave” problem in Moldova. The report says that the government does
not fully comply with minimum standards for eliminating the problem, but is trying to do
5 Agence France Presse wire service dispatch, February 24, 2005.

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so. One problem is that part of trafficking takes place in Transnistria, where the
government has no control.
In a June 2004 visit to Moldova, Secretary of Defense Donald Rumsfeld thanked
Moldova for its contributions to the fight against terror and its participation in the
multinational peacekeeping forces in Iraq. The most recent Moldovan contingent of 12
demining troops were withdrawn in February 2005. There are currently no Moldovan
troops in Iraq, but Moldovan officials have left open the possibility that a new contingent
could be deployed, if approved by the new parliament elected in March 2005.
The United States has worked with the European Union to put pressure on the
Transnistria leadership to end its obstructionist tactics in negotiations on the region’s
future. On February 22, 2003, the United States and the European Union announced a
visa ban against 17 top Transnistrian leaders. Other Transnistrian officials involved with
the harassment of Latin-script schools were added to this list in 2004. The United States
has refused to ratify the Conventional Forces in Europe (CFE) treaty until several
conditions are met, including the withdrawal of Russian troops from Moldova. The
United States has committed up to $14 million to the OSCE trust fund to facilitate the
withdrawal of Russian troops from Moldova.
The United States has provided aid to Moldova to help meet political and economic
reform objectives. The United States will provide an estimated $21.7 million in
assistance to Moldova in FY2005. The Administration has requested $21.1 million for
FY2006. U.S. aid is aimed at supporting independent media and non-governmental
organizations in Moldova, as well as fostering cultural and civic exchanges. U.S.
economic aid has played a key role in Moldova’s land reform program. The United States
donates humanitarian aid in the form of food and medicine to particularly vulnerable parts
of Moldova’s impoverished population. The United States also provides security
assistance to Moldova, including Excess Defense Articles. U.S. security assistance is used
to help Moldova participate in Partnership for Peace exercises, and to develop its
peacekeeping capacity and interoperability with NATO.
A few observers have questioned whether the United States is doing enough to
support Moldova’s sovereignty. They claim that U.S. support for plans to solve the
Transnistria problem by federalizing Moldova will serve to weaken Moldova’s
sovereignty, make it more dependent on Russia and hinder its European integration. They
view Russia’s policy in Moldova as part of a larger strategy to reestablish control over the
countries of the former Soviet Union. They also say that the United States should take
a stronger stand against the Russian troop presence in Moldova, giving it a higher priority
in the U.S.-Russian relationship.6 U.S. support for Moldova will be all the more
important, they say, because the victory of pro-Western forces in Ukraine could cause
Russia, angered by its setback in Kiev, to increase pressure on Moldova. However, other
observers believe that U.S. officials may view “federalization” as the best result that
Moldova can realistically expect, and that the United States might not want to jeopardize
U.S. ties with Russia on possibly more important issues such as energy cooperation or the
war on terrorism.
6 Vladimir Socor, “The West Must Bring Moldova Into the Fold,” Moscow Times, April 19, 2004.

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