MOLDOVAN GOVERNMENT CAVES IN TO GAZPROM.

The Moldovan government announced yesterday that it has approved the plan to turn the control of the country’s entire gas supply system over to Gazprom. The handover will repay a part of Moldova’s arrears to the Russian state monopoly. Gazprom will hold 51 percent of the stock, Transdniester–a Russian protectorate–14 percent and Moldova 35 percent. Gazprom is not required to invest anything under this deal.

In an accompanying move, the Moldovan government announced the introduction of a “state of emergency” in the energy sector. The measure presumably signifies an attempt to get more serious about collecting gas and electricity usage fees from industrial and residential consumers (Flux, Basapress, October 15).

The government failed to explain why it has not obtained from Gazprom or the Russian government the same type of deal that Ukraine and Belarus recently obtained: namely, to repay the arrears, mostly in kind, and mostly with agricultural products. Chisinau is, after all, desperate to regain access to the Russian agricultural market, having failed to wean itself in seven years of independence. Either Prime Minister Ion Ciubuc mishandled his recent negotiations with Gazprom chairman Rem Vyakhirev, or Moscow decided to treat Moldova more drastically than it has recently treated Ukraine and Belarus.

Chronic consumer default is the main cause of Moldova’s indebtedness to Gazprom. Since 1991, successive governments guided by electoral imperatives tolerated consumer defaults to the national gas and electricity companies. The governments thereby drove the companies into de facto bankruptcy, then converted the companies’ debts to Gazprom into Moldovan state debts. Meanwhile no capital repairs were made to the energy sector. Gazprom is acquiring a decaying sector, but also a political leverage which the Russian state will be in a position to exercise, and which Moldova will find difficult to shake off. This government’s handover plan is subject to parliamentary approval. The parties that form the government hold an absolute majority of the seats in parliament.

ALIEV DECLARED THE FIRST-ROUND WINNER.