Publication: Monitor Volume: 4 Issue: 212

Russia’s Gazprom chairman Rem Vyakhirev has officially notified Moldovan President Petru Lucinschi that Gazprom is discontinuing “unreimbursed” gas deliveries until such time as Moldova pays for current deliveries and makes progress toward repaying its arrears. Vyakhirev’s letter, made available on November 13 by Moldova’s presidential office, cites two reasons for Gazprom’s decision. First, Moldova has made almost no payments for gas delivered in 1998. Second, Chisinau has reneged on its promise to offset part of its arrears through an issue of state bonds to Gazprom.

Because almost all deliveries in 1998 apparently qualify as unreimbursed, Gazprom’s threat to “reduce deliveries to a minimum” is to be taken literally. The Russian company had already reduced the deliveries by 50 percent in July. The bond issue was vetoed by the IMF last month, on the grounds that it would increase Moldova’s already excessive external indebtedness. Chisinau agreed to cancel this scheme as part of the IMF’s conditions for reopening credits to Moldova. Gazprom’s retaliatory decision comes at the worst possible time–the onset of winter (Flux, November 13).

Yet Gazprom’s decision contains a potential silver lining. As “punishment” for Moldova’s debt delinquency and backtracking on the bond issue, Vyakhirev writes that Gazprom is pulling out of the agreement of intent to take over Moldova’s internal gas distribution and gas-based power generation system. That agreement, signed by a supine Prime Minister Ion Ciubuc in Moscow last month and subject to parliamentary ratification (see the Monitor, October 16), could mortgage Moldova’s freedom of action vis-a-vis Russia for years to come. Gazprom evidently concluded, not unreasonably, that Chisinau was desperate to settle on any terms as winter approached. Furthermore, Gazprom is being remarkably lenient toward Transdniester, whose gas debt is double that of Chisinau–ca. US$400 million versus ca. US$200 million.

Some Moldovan government officials wrongly described the Moscow agreement as binding. Vyakhirev’s repudiation confirms that it was not binding and unintentionally offers Chisinau a way out. Moldova may now have a last chance to negotiate a deal similar to those concluded by Ukraine and Belarus with Gazprom and the Russian government: namely, paying for the gas with agricultural products. Should Moscow reject this type of settlement with Moldova, and inexplicably single it out for a radically different treatment, it would substantiate the assumption that it uses the “gas weapon” to weaken Moldova’s hand in the upcoming talks on Transdniester conflict settlement and the withdrawal of Russian troops.