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COUNTRY BRIEFS


INTRODUCTION

Moldova is a landlocked country in Eastern Europe, located between Romania to the west and Ukraine to the north, east and south. Moldova emerged as an independent republic in 1991 following the collapse of the Soviet Union. The majority of Moldova's 3.6 million citizens (2009 est) are of Romanian descent, and the two countries share a common cultural heritage. The official language is Moldovan. The city of Chişinău is Moldova's capital.

Moldova celebrates its national day on 27 August.

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POLITICAL OVERVIEW

Moldova is a republic with a President as its Head of State and a Prime Minister as its Head of Government. Its parliament is unicameral, comprising 101 seats, to which members are elected from party lists on a proportional representation basis. The President is directly elected by the parliament for a four-year term. The President in turn appoints the Prime Minister with the approval of the parliament.

Moldova declared its independence from the Soviet Union on 27 August 1991. However, after parliamentary elections in 2001, Moldova became the first former Soviet republic to return the Communist Party to power since the fall of the Soviet Union. Vladimir Voronin was elected President, and Vasile Tarlev was appointed Prime Minister. In April 2005, parliament re-elected Voronin as President for a second term and he in turn re-appointed Vasile Tarlev as Prime Minister. After Mr Tarlev resigned in March 2008, Zinaida Greceanii was appointed Prime Minister after a vote of confidence of the Parliament. The most recent parliamentary elections, held on 29 July 2009, saw Mr Voronin's Communist Party lose 20 per cent of its seats.

In September 2009, Vladimir Voronin resigned from his role as President. This led to the appointment of the Speaker of Parliament, Mihai Ghimpu, as Acting President and Vlad Filat as Prime Minister. Mr Ghimpu is the Liberal Party leader and Mr Filat is the leader of the Liberal Democratic Party of Moldova. In August 2009, the Liberal Party, the Liberal Democratic Party of Moldova, the Democratic Party of Moldova and the Party Alliance Our Moldova, established a governing coalition under the banner “Alliance for European Integration”.

Moldova has actively participated in the EU's European Neighbourhood Policy (ENP). Moldova has requested a new agreement to replace the EU-Moldova Partnership and Cooperation Agreement which entered into force in 1998. On 3 December 2008, the EU announced an Eastern Partnership proposal to build on the ENP with its Eastern Partners, including Moldova, and confirmed that its funding for bilateral programs to Moldova between 2007 and 2010 would amount to €209.7 million.

Moldova is a member of the GUAM initiative for co-operation between pro-western former Soviet Union states (Georgia, Ukraine, Azerbaijan and Moldova). In May 2006, GUAM became the "Organisation for Democracy and Economic Development" (ODED) with headquarters in Kyiv, Ukraine.

Transdniestr (or Transnistria) dispute

The fall of the Soviet Union led to a debate in Moldova over its ethnic and cultural identity, including whether Russian should continue to be recognised as an official language, and in September 1990 Transdniestr, the area east of the Dniester river, attempted to break away. This eventually led to a brief civil war in early 1992, following which a ceasefire agreement was signed in July 1992. Transdniestr separatists established their own administration and Russia deployed peacekeeping troops into the region. A Memorandum of Understanding guaranteeing a degree of autonomy for the region was signed in 1997.

In February 2003, then President Voronin proposed a new Moldovan constitution in which Transdniestr would be a separate federal unit. Transdniestr authorities participated in the negotiations, but differences of opinion over the structure of the federation and its powers stalled negotiations. In late November 2003, Russia put forward a new proposal for settling the dispute. Although the paper was initially welcomed by then President Voronin, opposition from other parties again stalled the negotiations. The region has been under OSCE (Organisation for Security and Cooperation in Europe) supervision since 1993.

The Russian military remains in the breakaway region. Chişinău offers a large degree of autonomy, while Tiraspol (the second largest city in Moldova and the capital and administrative centre of Transnistria) demands independence. Transnistria is internationally recognized as part of Moldova, but the authorities in Chişinău do not exercise any control over that territory.

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ECONOMIC OVERVIEW

Moldova is one of the poorest countries in Europe and has significant foreign debt and high unemployment. The economy is based on agriculture, including horticulture, viticulture and tobacco production. The country does not have any significant known mineral deposits and relies heavily on Russian energy.

Economic reform measures have included the introduction of a stable convertible currency and real interest rates, the end of price fixing and export controls, the privatisation of land and the eradication of preferential deals for inefficient state-owned enterprises. The continuing reliance on agriculture, however, means that Moldova's economy is extremely vulnerable to adverse weather conditions and fluctuations in international markets.

Moldova experienced a downturn in its economy as a result of the global economic crisis. In 2009, real GDP growth contracted to minus 6.5 per cent. Exports dropped by 20 per cent and foreign direct investment was sharply curtailed due to the slump in neighbouring countries. IMF has forecast 2.5 per cent real GDP growth in 2010.

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BILATERAL RELATIONSHIP

Australia's Ambassador in Moscow is accredited to Moldova. Moldova has no resident representation in Australia.

Bilateral economic and trade relationship

Australia's trade and investment relationship with Moldova is currently very small. Total two-way merchandise trade in 2009 was A$660,000.

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Last Updated: August 2010

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(L) Moldovan Leu (MDL)
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