Page 44 - BNE_magazine_10_2019 kolomoisky

44 I Southeast Europe bne October 2019
Since its admittance to the Eastern Partnership Programme in 2009, Moldova has promised reform repeatedly – yet recent events
in Chisinau make the European Commission’s (EC's) Association Implementation Report published on September 11 seem optimistic. While foreign media state that the document has praised reform, the report really finds little tangible progress. The EC actually finds scant evidence of change, and urges “rapid action... to meet the legitimate expectations of Moldovan citizens and to ensure the country’s adherence to the values the Association Agreement is based on”. With the owner of Chisinau International Airport now threatening legal action if its assets are threatened, Dodon is not just risking the suspension of vital budgetary assistance, but turning Moldova into a proverbial nightmare for foreign investors.
When Sandu and Dodon formed a government after months of deadlock this July, oligarchs reviled by European Union officials such as Vlad Plahotnuic fled the country, creating a brief window to halt the corruption that
has left Moldova lost in transition.
Yet promises of peace, prosperity
and neutrality seem hollow in a land where vendettas fought by figures of power against foreign investors have contributed to inflation at more than 5%, with the cost of some consumer
goods seeing an 8% inflationary
price hike. When NRI Invest acquired the concession to operate Chisinau International Airport from Avia Invest – a Russian company represented by Moldovan oligarch Ilan Shor, who some allege to be the company’s beneficial owner – the deal looked good. As concessionaire, Avia Invest did very little to improve the country’s only international airport. In a reaction published on September 16 by NRI, the company hit back at the president’s ire for their project, outlining plans
to improve infrastructure which
would greatly improve transport to Moldova. NRI declined to comment when contacted, but a source familiar with the concession’s transfer confirmed that the stated foreign direct investment is in line with that presented to government at the time of the transaction’s completion. The deal was initially supported by Sandu, but after it piqued Dodon’s wrath, she appears to have switched positions.
Moldova’s GDP growth in the second quarter of 2019 hit 5.8%, yet the starting point for this leap was desperately low – which is why the country is desperately prospecting for loans in Western European capitals. As such, attacks on investors like NRI raise significantly greater questions about the new custodians of Moldova’s ailing economy, than they do about foreign investments.
For instance, Santander estimates
that foreign direct investment (FDI) inflows were 31.91% less in 2018 than they were prior to the financial crisis, noting, ominously, that “the Moldovan economic and political environment is not particularly attractive to investors. The country faces a number of challenges, including the need to fight corruption, improve the investment climate, remove obstacles for exporters, convert remittances into productive investments and develop a reliable financial sector”.
Meanwhile, the World Bank’s economic forecast, amended May 13, finds that “with declining productivity levels, lower external financing and existing structural deficiencies, Moldova remains highly vulnerable to shocks. Political uncertainty and vested interests undermine the reform agenda and the investment process”.
It was thus puzzling when, in a
recent Facebook post, the prime minister renewed her opposition to
the concession, announcing that the country’s Public Property Agency had filed proceedings, “requesting the recognition of the nullity of the contract” which Sandu described as “abusive”. This statement is quite remarkable,
as NRI will invest at least $79.2mn in Moldova by the end of the year. To be clear, Moldova’s FDI inflow in 2018 was
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