The approval of the Law on regional development in Moldova, voted in Parliament on December 28, 2006, published in the Official Monitor of February 6, 2007, marked the second public recognition of the fact that that administrative territorial system based on raions, resumed in 2001, has been a major strategic mistake, according to the experts from the Independent Analysis Centre “Expert-Grup”, Info-Prim Neo reports. Experts say that the first recognition of the mistake was the creation of the ministry of Local public Administration (MAPL). Although it has been denied by several analysts and politicians, the Constitutional Court qualified the foundation of the ministry as being in compliance with the Constitution’s principles. However, as experts affirm, it is already common that issues which are perfectly constitutional are bizarre and illogic from the economic point of view. The reason is that the creation of the MAPL and the approval of the Law on regional development are government’s reactions to the lack of economic and administrative vitality of the raions. Unfortunately, in the real world it is not enough to have a new law and a new ministry in order to improve the life in regions and substitute powerful and autonomous local administration. Moldova’s local public administration system has been subject to a constant revolution during the last 10 years. Re-launching in 2001 of the soviet system division into raions has been particularly harmful. It hampered the formation of economically powerful regions and politically subdued local administration to the central government. In January, the Law on regional development in Moldova entered into force. What will it change? [Premises] The EU-Moldova Action Plan prescribes a range of obligations for the Government of Chisinau, concerning the economic development. One of the most important objectives sounds rather modest: “Promote balanced regional development; reduce economic and social disparities across the country”. The objective is explained in just two paragraphs: 1. Implement measures on regional and rural development, taking as a basis the approach envisaged in the EGPRSP and using an integrated approach that builds on results of donors’ past activity in the country, as well as on EU best practice. 2. Develop plan and undertake specific actions to promote growth of small and medium size enterprises (SMEs) in regions and in rural areas. These measures bear an incontestable importance. There’s need for an authentic policy of regional development, because positive economic tendencies registered in 2001 to 2005 were limited only to several big cities, while villages and small towns are in a terrible economic situation. [Essence of the law] The aim of the Law on regional development can bee summed up as the creation of premises for a geographically more balanced social-economic development. Several principles of regional development policy are set up – transparency and the efficiency in utilising resources allotted within this policy. The law defines 6 “development regions” as functional territorial units, without constituting legal entities, which represent the frameworks of planification, estimation and implementation of the regional development policy - North, Centre, South, Gagauzia, Chisinau Municipality and Transnistria, including Bender municipality. Regional Development Councils are to be instituted as well as the National Council for Coordinating Regional Development. They will also lack legal personality. Regional Development Agencies will be created as public institutions under the MAPL. A National Fund for Regional Development will be constituted for financing regional development projects and programmes, having a quantum of at least 1% from the incomes of the state budget. The law stipulates that the MAPL will work out a National Strategy of Regional Development, which will establish development priorities. In compliance with these priorities, regional development strategies will be worked out in each of the 6 regions for a 7 year term. The strategies will include plans established for 3 years, which will be implemented through programmes and projects. MAPL will select the plans and include them into a Single Programme Document which will provide priority regional development programmes and projects for a 3 year period. [Possible risks and problems] Probably even in 2007 we will be able to see how is the institutional framework and the planning process of regional development provided by the law, adapted to real conditions. However, even now one can identify a series of potential risks and problems which could appear while implementing the law. 1. Planning process of the regional development will be too centralised and inert. Especially: • working out, monitoring and estimating the implementation of the National Strategy of Regional Development will be fully performed by the MAPL. • National Council will have the formal role of approving the National Strategy; the structure and regulations of the Council are to be worked out by the MAPL and approved by the Government. • MAPL will administrate the Fund for Regional Development, will propose the Single Programme Document and the mechanism of financing regional development. • MAPL will establish methodology and typical structures for Regional strategies and will analyse whether they are compatible and comply with national planning documents. • MAPL will define criteria for identifying disparities in regional development. • MAPL will organise the selection of private sector and civil society representatives who will participate in regional councils. 2. The Law stipulates that partnership is one of the key-principles in supporting regional development. Partnership involves the cooperation of public authorities with the private sector and the civil society. Despite this provision, the Law doesn’t stipulate expressly that the National Council of Regional Development will also include representatives of the civil society, but only ministers, chairmen of Regional Councils and one representative of the private sector, delegated by each Regional Council. Moreover, only representatives of local public administration can be elected as chairmen and deputy chairmen of Regional Councils. 3. A fundamental principle of transparent and efficient public policies is that the institution, which is responsible for working out and monitoring policies should be other than that which implement these policies. In the context of the law, Regional Development Agencies are responsible in the same time for working out, implementation, monitoring and estimation of Regional Development Strategies. This curious combination of competences will undermine both the transparency and the efficiency of the Strategies’ planning and implementation process. Certainly, Agencies will not hold enough personnel for strategic planning. This is why the collaboration with NGOs is unavoidable. 4. The role and the way of functioning of the Regional Councils are also unclear. According to the law, “Regional Council is composed of raions’ chairmen, mayors, representatives of the private sector and the civil society”. Taking into consideration only the local public administration, one can realise, for example, that the Regional council of the South region should include 8 raion chairmen and about 200 mayors. For correctitude, it should also meet around 10 representatives of the civil society and 30 – of the private sector. How will it function and how efficient would such a “monster” be? 5. The minimum threshold provided by the Law for financing the Regional Development Fund (1% from the state budget incomes) is ridiculous. In terms of the budget for 2007 this would mean MDL 121 mln. The maximum sum which could be allotted by the Ministry of Finances is MDL 150 mln. These sums are not enough for creating a regional development policy. Expert’s estimations show that only the adequate, sustainable repairs of local public roads would require USD 2.5 to 3 bln. [Conclusions] The Law on regional development in Moldova is the result of good intentions, to provide conditions for a balanced territorial socio-economic development. Unfortunately, the proposed model will not be able to attain this goal, because development regions created by this law are more statistical units rather than prototypes of regions, capable of financial autonomy and supported economic development. In order that regions can administrate development strategies and projects, they should concentrate and utilize human and financial resources. For this, strong regional administrations should be constituted, which would be able to negotiate not only with the national government but also to participate in international activities and compete for the direct attraction of European funds. However, experts hope that the analysed law is just the first step of the transition to an authentic regional development system in Moldova.