RUSSIA USES MOLDOVAN DEBT FOR LEVERAGE.

The inaugural session of the Russian-Moldovan intergovernmental commission for economic cooperation produced a debt-rescheduling agreement for most of Moldova’s $430 million worth of debts to Russia, incurred mainly for fuel deliveries and owed mostly to Gazprom. Moldova agreed to repay the debt within seven years, in cash or industrial property, beginning immediately. The Russian side targeted Moldovan industrial and transportation enterprises on both banks of the Dniester for possible takeover in the form of joint enterprises or "financial-industrial groups."

Russia asked Moldova to reactivate its Soviet-era military industrial plants — now partly idled, partly converted to civilian production — by placing Russian military orders and linking them with analogous Russian plants. Moldova gave its preliminary consent.

Moldova’s request that Russia ease taxation of Moldovan agricultural exports, which could have offset at least part of the arrears or of future Russian fuel deliveries, was turned down. (Basapress, Flux, Infotag, September 16 and 17)

The rescheduling negotiations and agreement with Moldova might serve as a model for Russian deals with other CIS countries. The results in Chisinau reflect Russia’s recently stated policy of using debt collection to reestablish a strong economic presence in CIS countries. Russia’s barriers against its neighbors’ exports contravene CIS and bilateral agreements. But not only do they serve Russian protectionist interests, they add to the countries’ debts — which gives Russia the leverage with which to grab the debtors’ fixed assets. Reactivation of former military-industrial plants would imply reversing their post-Soviet conversion to civilian production. This agenda is inimical to economic reforms in both Russia and CIS countries, is not unanimously supported in the Russian government, and may well be beyond Moscow’s current possibilities. But most CIS countries are also poorly placed to resist.

Defense Ministry Lambastes Government for Funding Failures.