Mikhail Khazin: Moldova has to make an important choice between west and east

23 august 2012, 13:31 print out copy link The link has been copied to the Clipboard
Mikhail Khazin Mikhail Khazin

Within the framework of the International Media Club Format A-3, Russian economist, publicist and president of the consulting firm, Neokon, Mikhail Leonidovich Khazin, is on a visit to Chisinau. 

Mikhail Khazin’s exclusive interview with Infotag News Agency:

Mikhail Leonidovich, German Chancellor Angela Merkel will pay a visit to Moldova on August 22. In your opinion, what is the importance of this visit for Moldova? 

I suppose that the visit will settle some strategic issues, but not tactical ones. Germany will hold new elections soon. Even is Merkel loses the elections, she has to fulfill some commitments taken towards her colleagues, so that they do not suffer much. I do not expect any extraordinary changes from this visit. 

In terms of Moldova’s trade turnover with different countries, Russia is further holding the leading position, being followed by Romania and Ukraine. Are there any reserves for the enlargement of the business cooperation, in your opinion? 

Russia’s pivotal question in this respect is the food supplies market. Russia is willing to boost the cooperation with Moldova. Yet, Russia has quite tough requirements on the matter. Moldova has to make a choice: either to abide by the rules of the game and to join the Customs Union between Belarus, Kazakhstan, and Russia or to reject them. Upon its accession to the Customs Union, Moldova will benefit from trade and economic preferences. On the other side, if Moldova does not accept the rules of the game, it will have to pull through the customs barriers, even within the framework of the World Trade Organization. 

Can Moldova be a member of two unions at the same time: the European Union and the Customs Union? 

A country of Moldova’s scale cannot afford promoting an independent policy. Small countries can promote their own interests only under the economic boom, which is not recorded at present. Even in that case, small countries would have to look for sales markets. Your country is facing a difficult choice between exporting its products to the Western countries or to the Eastern ones. The choice of one direction automatically rules out any other options. As an economist, I can ascertain that Moldova has no prospects on the Western market. Yet, you get to choose. So far, Moldova has not applied for the membership of the Customs Union. 

Moldova’s foreign debt is increasing. Yet, the country further receives grants and loans from the European Union and the United States. It would be quite difficult to redeem them. What possible scenario may face Moldova in this respect? 

Moldova does not have financial means to repay the debts. Thus, Western countries might demand that Moldova curtail the state budget’s spending, by cutting the pensions and salaries. If your country chooses the Western course, if may face similar problems as Greece now, where high unemployment rates and severe shortages of innovations and present-day production are recorded. 

What scenario of Transnistrian settlement may be possible in the short run? 

The unification of the two banks of the Dniester River is doubtful, as the Transnistrian residents vehemently oppose Moldova’s European integration course. For different reasons, the attitude towards Romania is very ambiguous. 

Moldova’s situation is quite similar to the Ukrainian scenario, when the largest part of the population understands that the accession into the European Union would be a catastrophe for the country and for its economy. Yet, since the country’s top leaders keep their money in European banks, they stand ready for anything. 

Should we expect deterioration in the global economic situation, or on the contrary – an economical upturn? 

The global economic downturn will only gain scope, as the mechanisms of its development did not change. I suppose that this autumn or in spring 2013, a new strategic economic setback will take place on the international markets. As we could see, the attempts to use money emissions and to switch on the money printing machines did not produce results. 

At present, Moldova is oriented towards the Western economic partners. Yet, the biggest share of its produce is exported to the Eastern market. You have said that Russia might also face an economic downturn. What expectations should the Moldovan exporters have? 

I think that the economic slowdown in Russia will not be as serious as in the European Union and the United States. Yet, the overall figures can be quite impressive. You should keep in mind the fact that if Moldova has some strategic agreements with the Russian Federation, the country will not face any problems with the sale of its goods. For instance, Belarus and Kazakhstan are actively selling their produce on the Russian market.  

Transnistria aims at jointing the Customs Union, with or without Moldova. Can the Transnistrian region rely on some economic preferences? 

Russia will not accept even a formal breakup of Moldova. In this case, Transnistria will have to wait until Moldova realizes that the Western course is unpromising for the country and until it joins the Customs Union. Another option is the deterioration of relations with Moldova, but this is not the best solution. 

How can the small countries cope with the economic crisis? 

They should look for their own way and for the appropriate sales markets. Until quite recently, Moldova was thinking that it can enter the European Union’s market. Yet, the EU has imposed tough conditions on the production of goods. This will lead to the disappearance of the country’s industry. Classical examples in this respect are Estonia, Latvia and Lithuania, in particular. Latvia once had a well-developed electronic, automotive and electrotechnical industry. Almost the entire industry of these countries has disappeared. Latvia and Estonia are on the verge of an economic catastrophe. Only a small percentage of people took advantage of the EU membership, whereas the rest of the people incurred significant losses. Spanish, Bulgarian and Greek citizens quit their countries in search of jobs. The unemployment rates in these countries may reach up to 25%. Only gastarbeiters may return home, which will lead to serious political problems. These people will stage street riots, seeking the change of the political regime. 

Thank You for the interview, Mr. Khazin!

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