Tuesday, June 23, 2009

Play Money

Having been turned down by western donors lenders (due to corruption and the PCRM's lax fiscal discipline), we were treated this week to the sight of Voronin and Grecianai heading off to Moscow, cap in hand, to beg the Russians for money.

This is a vitally important issue. It is an open secret that Moldova is bankrupt and will have extreme difficulty paying pensions and government salaries in the lead up to the July 29 election. Remember that pensions were increased just before the April 5th election, exacerbating the country's current financial situation. Remember also that the communists were, until very recently, in denial about the impact that the global recession would have on the Moldovan economy, primarily through decreased remittances from Moldovans working overseas.

The key issue is this: should the PCRM fail to make the July 20 pension payment, a large chunk of their electorate will desert them and it will be all over for the communists.

Apparently its all sorted now though - Voronin and Grecianai have returned from Moscow with a pledge from Medvedev to provide $500m of credit. This has naturally been trumpeted by the state media alongside footage showing Voronin in a position of honour alongside Medvedev at a remembrance day ceremony in Moscow.

Not so fast:

1. Kazakhstan was promised several billion by the Russians some months ago, but hasn't seen a kopek yet. Kyrghyzstan is in a similar situation with respect to the $2bn bribe the Russians used to get them to close the US air-force base at Manas.
2. The Russians need to get their Duma to legislate before the Russian government can send any money. This means that the first tranche of the credit ($150m) won't be received until after the election (and would most likely arrive in December, if it is paid at all)
3. Voronin has breached Moldova's own budget law in accepting the credit. This law states that, in 2009, the national debt is not allowed to exceed $841m. It already stands at around $800m. As parliament is now out of session, this law cannot be changed prior to the election.

So we're not talking about real money here. Rather, we are viewing political theatre intended to reassure the ignorant Moldovan masses about the competence of the PCRM government and the backing it enjoys from big brother Russia.

Let's hope that the Moldovan masses aren't that ignorant and let's do everything in our power to enlighten them.

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