Before the turn of the year, IPN looks back on the events that had the biggest impact on Moldova and asks experts to comment on their immediate effects, as well on what we should expect of them in the long term.
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In July 2014, Russia banned the import of Moldovan fresh and canned fruits. In September, new taxes were introduced for the rest of imports from Moldova. Finally, in October, Russia banned the import of meat and products thereof. Economic expert Viorel Chivriga thinks that Russia's actions were motivated by the path chosen by Moldova. Although these bans were distributed in time, it was easy to figure out in advance that they were measures against the signing and ratification of the Moldova-EU Association Agreement.
Chivriga says that the ban of Moldovan alcoholic beverages in Russia deprived local producers of a significant market. In agriculture, apple and plum farmers were hit the most. However, the losses aren't as big as feared, as some export goods have been redirected to other markets and or processed in Moldova.
Last year, Moldova's imports from Russia were slightly above the 70 million dollars mark, while exports were estimated at 200 million dollars. According to Chivriga, the ban on alcoholic drinks caused revenue losses of 80 million dollars and the ban on agrifood caused losses under 80 million dollars. The latter goods have been exported instead to the EU or Belarus or have been processed domestically. Local prices for the Russia-banned goods didn't drop. As regards the processing industry, producers have large stocks and it is more difficult to find a new market. In the field of animal farming, the situation isn't dramatic as Moldova's exports to Russia were low to begin with.
Viorel Chivriga remarked that things went somewhat unexpectedly for people, although the experts predicted it. The agreements signed by Moldova are an opportunity, but one that can be easily missed. The Free Trade Agreement with the members of the Commonwealth of Independent States doesn't guarantee anything and it has been easily violated. The economist says that Russia's embargoes have been a hard blow to Moldova and to the numerous people working in these fields or related to them. According to him, this may serve as a final lesson for the state institutions that have severely underperformed this year. Chivriga stressed that lessons had to be learned back in the times of the 2005-2006 Russian embargoes and the authorities had to have an alternative plan to diminish the impact of such a blow. Instead, the institutions of the state have been nearly idle this time. “Producers are also to blame because they should've come up with measures to protect their businesses”, opined the expert.
At this stage, Chivriga sees no other solution than the diversification of markets. Although steps are already being made in this direction, he thinks that it will take several years to accomplish this. Some Moldovan products are finding their way on markets in Asia or Africa. Meanwhile, producers from regions that opposed or were skeptical about the EU Association Agreement, like those in Gagauzia, are now beginning to export to the EU. According to Chivriga, this experience must be disseminated and the transfer of experience will help producers to penetrate other markets.
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Note: As part of this series, we have already reviewed the obtaining of the liberalized visa regime with the EU and the signing of the EU Association Agreement. The other events to be recapped are the November 30 election and the formation of the parliamentary majority.
Mariana Galben, IPN
