Source: EURLEX
Language: en
Format: md

*|*

# 52015SC0069

**JOINT STAFF WORKING DOCUMENT Implementation of the European Neighbourhood Policy in the Republic of Moldova Progress in 2014 and recommendations for actions Accompanying the document JOINT COMMUNICATION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Implementation of the European Neighbourhood Policy in 2014 /\* SWD/2015/0069 final \*/**

  

1.         OVERALL
ASSESSMENT AND RECOMMENDATIONS FOR ACTION

This document
reports on progress made between 1 January and 31 December 2014 on the
implementation of the EU-Republic of Moldova Association Agenda. The
Association Agenda replaced the European Neighbourhood Policy (ENP) Action Plan
in June 2014. Developments outside this period are considered where relevant.
This report is not a general assessment of the political and economic situation
in the Republic of Moldova (hereinafter referred to as ‘Moldova’). Information
on regional and multilateral sector issues is contained in the Eastern
Partnership Implementation Report.

2014 was a
period of general political stability overall for Moldova and the government
continued to work steadily on the country´s European agenda. Major achievements
were reached in 2014 in the bilateral relations between the EU and Moldova. On
27 June 2014, Moldova and the EU signed the Association Agreement, including a
Deep and Comprehensive Free Trade Area (AA/DCFTA) and Moldova swiftly ratified
the agreement on 2 July 2014. The major parts of the AA/DCFTA took effect
provisionally on 1 September 2014, pending ratification by all EU Member
States. Starting from 28 April 2014, Moldovan citizens
were able to travel to the Schengen area visa-free, providing them with a
tangible benefit of EU-Moldovan cooperation. Around 360 000 people took
advantage of this opportunity in 2014.

High-level
contacts between the EU and Moldova continued to intensify in 2014. A first-of-its kind meeting between the Moldovan Government and the
EU College of Commissioners took place in May 2014. The last EU-Moldovan Cooperation Council before the provisional
entry into force of the Association Agreement was held in June 2014.

Moldova made
less progress than in previous years on deep and sustainable democracy and on
the respect of human rights and fundamental freedoms. The
overall level of political freedom in Moldova continued to be comparatively
high. According to the International Election Observation Mission, the
parliamentary elections held on 30 November 2014 offered voters a wide choice
of political alternatives and were generally well administered. However, one
contestant was deregistered a few days before the elections, and one political
party took part in the elections despite a court decision to deregister it.
There were also problems over the functioning of the electronic system for the
processing of voters on the polling day and the opening of criminal cases
against several supporters of the deregistered Patria party in December 2014
raised concerns.

The media
enjoyed a good level of freedom in comparison with the region as a whole.
However, there were some concerns over the concentration and transparency of
media ownership, as many outlets were subject to political interference. The
government made some progress on implementing legislation on judicial reform
and, by the end of 2014, some important parts of the benchmarks for the 2011-16
Justice Sector Reform Strategy had been implemented. However, corruption in the
Moldovan judiciary remained a major concern and the reform of the Public
Prosecutor´s office has stalled. Reforms to prevent torture, to better ensure
gender equality and on the protection of children were launched and continued
in 2014. Moldova also made limited progress on reforming its public
administration and on fiscal decentralisation. The reform of the public sector
has been hampered by vested interests closely interlinked with politics.

Civil
society in Moldova is still rather weak, but has grown in a favourable
environment. The partnership between public authorities and civil society
organisations (CSOs) made continuous progress, which resulted in particular in
a heightened role for civil society in decision-making.

With
support from the Organisation for Security and Cooperation in Europe (OSCE),
Moldova attempted to redefine the relationship between the Gagauz Autonomous
Region and the central authorities, but little progress was made.

Moldova’s economy faced a difficult situation in 2014 in light of
numerous trade embargoes imposed on Moldovan goods by the Russian Federation
and uncertainty related to the situation in Ukraine. After impressive growth in 2013, GDP growth
slowed down in the first half
of 2014. The EU-28 remained the main trading partner of
Moldova with a trade weight of 53.2% in total exports and 48.2% of total
Moldovan imports.

Serious problems in Moldova’s financial sector posed a risk to
stable economic development. Shortcomings in the banking sector came to the
fore at the end of 2014 with two consecutive decisions by the National Bank of
Moldova to place three major commercial banks under special administration,
representing about 30% of total banking assets (Banca de Economii and Banca
Sociala, followed by a similar decision on Unibank). No new agreement was
concluded with the IMF after the end of the previous IMF programme in April
2014, as the Moldovan Government had some objections to IMF requirements for
sound fiscal policies.

Moldova made some progress on reforms to adapt its economy to comply
with the Deep and Comprehensive Free Trade Area, for example on the free movement of goods, on technical regulations, customs, sanitary and phytosanitary standards and company
law. However, the investment climate remained
difficult.

In August Moldova inaugurated a gas interconnector with Romania,
marking a step forward in its efforts to improve energy supply security. A pre-feasibility study on the construction of the connecting
pipeline to Chişinău has also begun.

Moldova
made some overall progress in implementing the Association Agenda and the ENP
Action Plan, including by implementing the Justice Sector Reform Strategy, and
on reforming gender equality and the protection of children.

Minimal progress
was reached towards a resolution of the Transnistrian conflict. In 2014,
only two rounds of negotiations in the "5+2"-format took place and
several rounds were postponed.

Based on the assessment of its progress in 2014 on implementing the
ENP, Moldova should focus its work in the coming year on:

·
revising the Constitution in order to prevent
further institutional deadlocks. This process should be conducted in an
inclusive manner. Parts of Moldova’s political spectrum and the Council of
Europe’s Venice Commission will need to be consulted on constitutional reform;

·
continuing to improve media freedom by making
media ownership more transparent, ensuring the independence of the Audiovisual
Coordination Council, and adopting a new Audiovisual Code;

·
completing the reform of the Ombudsman,
consolidating the system of human rights protection and ensuring that the
National Human Rights Action Plan is implemented fully;

·
intensifying the fight against corruption and
focusing on corruption prevention. It is particularly important that Moldova
reforms the public prosecution service and the judiciary and ensures that the
National Anti-corruption Centre and National Integrity Commission are fully
independent;

·
continuing to reform the legal framework for
elections in line with recommendations by the OSCE/ODIHR and the Council of
Europe´s Venice Commission, in particular strengthening campaign finance
regulations;

·
making firm progress on justice and law
enforcement reform. This will involve consistent and forceful implementation of
the Justice Sector Reform Strategy and continuing the reform of the Ministry of
Interior and other relevant bodies;

·
eliminating failings in the legal system that
allow money laundering and ‘raider attacks’ to take place;

·
continuing progress on sectoral reforms and
bringing Moldovan law into line with the EU acquis to implement the
AA/DCFTA; raising public awareness and visibility of the merits of the
Association Agreement;

·
intensify the efforts to improve the business
and investment environment, ensure a level-playing field for all economic
operators, increase the competitiveness of the Moldovan economy and counter the
shadow economy;

·
providing better public services by deepening
and strategically steering the reform of public administration and implementing
the decentralisation strategy in an inclusive manner;

·
taking steps to improve corporate governance and
oversight in the financial sector. This includes strengthening shareholder
transparency and the National Bank’s supervisory powers in the banking sector;

·
continuing to engage proactively with the
Transnistrian side to promote a mutually acceptable vision for a common future,
and creating conditions enabling the application of the AA/DCFTA to the entire
territory of Moldova;

·
continuing to integrate national minorities.
This will include ratifying the European Charter for Regional and Minority
Languages and further developing and implementing a strategy on the integration
of national minorities, in close cooperation with the OSCE High Commissioner on
National Minorities;

·
adopting the necessary measures to fully
implement the new Education Code, and starting to implement the vocational
education and training restructuring plan.

2.         POLITICAL DIALOGUE AND REFORM

Deep and sustainable democracy

In June 2014
Moldova and the EU signed the AA/DCFTA. The agreement committed Moldova to
developing democratic institutions and to upholding human rights in accordance
with European Union rules and standards. The agreement was ratified in July
2014 and provisionally came into force in September 2014.

In October 2014
Moldova’s Constitutional Court rejected a legal challenge by the Party of
Communists of the Republic of Moldova (PCRM) against the constitutionality of
the AA/DCFTA. The court confirmed the AA/DCFTA’s constitutionality, adding that
any position against Moldova’s alignment with Europe would be ‘a priori
unconstitutional’, based on the consideration that Moldova’s European alignment
follows logically from its declaration of independence.

According to the
International Election Observation Mission, the parliamentary elections held on
30 November 2014 offered voters a wide choice of political alternatives and
were generally well administered. However, one contestant was deregistered a
few days before the elections, and one political party took part in the
elections despite a court decision to deregister it. There were also problems
with the functioning of the electronic system for the processing of voters on
polling day and the opening of criminal cases against several supporters of the
deregistered Patria party in December 2014 also raised concerns.

Electoral
legislation was improved through amendments to the Electoral Code. These
included introducing a centralised voter registry and
discontinuing the use of Soviet-era passports. Recommendations by the Council
of Europe and the OSCE Office for Democratic Institutions and Human Rights
(ODIHR) to reduce the electoral threshold remained unaddressed. The Moldovan authorities have so far not introduced any special
measures to facilitate minority representation in Moldova’s proportional
representation electoral system.

In general, freedom
of expression and freedom of media remained good in Moldova in
comparison with the region as a whole, with free access and a large number of
media outlets. Despite some attempts to improve media freedom in 2014, no real progress was made,
especially on ensuring transparency in mass media
financing and ownership. The Moldovan media continued
to be controlled by a handful of political and business interest groups.
Concerns remained that it is not sufficiently transparent or pluralistic.

The draft
Audiovisual Code, drawn up in 2011 with support from the Council of Europe, the
EU and civil society, has yet to be adopted by the Moldovan Government and
Parliament. Proposed amendments included improving ownership transparency,
editorial freedom, media plurality and independence of the Audiovisual
Coordination Council. At the beginning of 2014, Moldova’s commitment to
upholding the principle of media plurality was shaken by a seemingly
politically motivated attempt to restrict several television channels’ access
to the audiovisual landscape. The perceived lack of independence of the
Audiovisual Coordination Council remained a concern. Media plurality was also
limited by an unfavourable financial environment for the media sector, as the
advertising services and mail delivery services markets were heavily
monopolised.

Moldova continued to work in 2014 on implementing the
2011-16 justice sector reform strategy by implementing some important
parts of the benchmarks laid down in the action plan. However, the pace of
reforms slowed in the second half
of 2014. Corruption and the
stalled reform of the public prosecution service remained major concerns, as
confirmed by an external assessment
mission evaluating the implementation of the EU-supported justice sector reform
programme.

In 2014 Moldova
continued implementing the laws on judiciary reform that were adopted by
parliament in the previous two years. The laws introduced a new system for
appointing, promoting and periodically assessing the performance of judges,
based on a transparent procedure and a balance of quantitative and qualitative
criteria. This system created
the conditions for a transparent and merit-based
promotion system for judges. Most judges have been assessed under the new system, although the procedure
and outcome of assessment process remained questionable, with some methodological imperfections leading to excessively positive
appraisals of judges. The European Judicial Training Network (EJTN) granted the
status of observer to the National Institute of Justice of the Republic of
Moldova in June 2014.

In order to
ensure fair trials, the authorities introduced a random case allocation system
and the audio recording of court proceedings. A single courts portal was
introduced in April 2014 to increase the transparency of the judiciary.

The government
adopted a law on judges’ disciplinary responsibility by decree in July 2014.
The law ensured that there is a clear separation between ethical and
disciplinary responsibility, defined grounds for disciplinary responsibility,
laid down revised transparency procedures, introduced new (financial) sanctions
and ensured the impartiality of the Committee on disciplinary responsibility.

No progress was made on reforming the public prosecution
service. One of the most serious problems was the
General Prosecutor's Office's lack of independence under the current legal framework.
In July 2014, the Moldovan Parliament managed to adopt only the concept of
prosecution service reform. In November 2014, following intense policy
dialogue, the draft prosecution service law drawn up by a working group in 2013
was sent to the Venice Commission for review. The Ministry of Justice only started preparations to ratify Protocol 12 to the European Convention on Human Rights in
2014.

Moldova’s political and economic development continued to be
hampered by systemic and high level corruption. Corruption
still remained a major cause of concern, with the
sectors most vulnerable to corruption including the judiciary, customs, public
procurement, health, the social sphere and education. Moldova continued to implement its 2011-15 national anti-corruption
strategy. In May 2014, after a delay of more than five months, parliament
approved the 2014-15 action plan to implement the strategy. In 2014, Transparency
International ranked Moldova 103th out of 175 countries on its Corruption
Perception Index (in 2013 Moldova ranked 102nd out of 177 countries.)

The previous progress report on Moldova recommended full
independence for the National Anti-Corruption Centre which has not happened.
The National Anti-Corruption Centre still answers to the government rather than
to parliament. This is not in compliance with international anti-corruption
standards and the criteria of Moldova’s visa liberalisation action plan and has
had a negative impact on the investigation of high-level corruption. Other
factors hampering the fight against corruption were low penalties and in some
cases impunity, and the lack of autonomy, capacity and independent
decision-making shown by the anti-corruption unit of the General Prosecutor´s
Office, which was responsible for prosecuting corruption cases following
investigation by the National Anti-Corruption Centre.

The professional integrity testing law came
into force in August 2014, but cannot be efficiently
implemented unless the entire domestic legal framework is adjusted in order to
take account of the law. In May 2014 a corresponding
legislative package was drafted and submitted to the
government. Despite strong calls from civil society, the legislative package
was not adopted in 2014.

Although a
legislative framework was in place to encourage the development of civil
society, the third sector remained weak at local and regional level and in
rural areas. Civil society participated in decision-making at central level
through the advocacy activities of the National Participation Council, which
monitors the government, and the NGO Council, which monitors parliament.
However, active participation in supervising the implementation of government
policies and monitoring local public authorities was low. The 2012-15 national
strategy for civil society development was only partially implemented. The
strategy’s main objectives were: (i) strengthening the role of civil society
organisations in monitoring policy implementation, (ii) addressing the
financial sustainability of civil society organisations and (iii) developing
active civic spirit and a volunteer culture. Although participation of civil
society in decision-making processes increased, few civil society
recommendations were actually adopted because a consultation mechanism was not
fully in place.

Civil society
organisations in Moldova had relatively few financial ties to government, but
they suffered from a lack of civic participation and a lack of public
confidence in the sector. As a result, civil society organisations were
donor-driven and adopted a segmented, fragmented, project-based approach,
limiting their overall impact. The adoption of the ‘2 %’ Law in July 2014,
providing funding for non-commercial organisations through fiscal
redistribution, was a major achievement. However, until practical mechanisms to
implement the law are adopted, its implementation is unsure. Social dialogue
improved through the activities of the National Commission for Consultation and
Collective Bargaining, but trade unions rarely achieved policy change and
businesses resorted more often to informal, non-transparent methods of
negotiation.

Other
human rights and fundamental freedoms

Some progress
was made on the respect of human rights. The reform of the Ombudsman’s
office to bring it in line with the Paris Principles on
national human rights institutions proceeded slowly. A new law on the Ombudsman (the Law on the Public Advocate) was
adopted by parliament in April 2014, after an earlier draft had been returned
to legislators by the President in response to complaints from development
partners and civil society. New ombudsmen have not yet been selected under the
new law due to a lack of consensus in parliament on the
selection process for candidates, and this weakened the Ombudsman’s office as
an institution.

Moldova launched
reforms to prevent torture, including in psychiatric facilities. An
anti-torture division was created within the General Prosecutor’s Office,
ensuring efficient and independent investigation of torture and ill-treatment.
Substantial efforts were made to improve the prison system, including plans for
new penitentiary facilities and reforms on young offenders.

The government
began to take steps to promote the integration of national minorities
into society. In line with the government’s action plan, the Bureau for
Inter-ethnic Relations formed a working group to draft a ‘Strategy on the
integration of national minorities’ with support from the OSCE High
Commissioner on National Minorities. The drafting of the strategy was suspended
in October 2014, due to the parliamentary electoral campaign. As part of its
efforts to strengthen Romanian as the state language, the Ministry of Education
drafted amendments to the Educational Code. Under the new code, which came into
force in October 2014, the Russian language was made an optional rather than a
compulsory subject for schools teaching in Romanian, which caused concern among
some minorities. The Council of Europe’s European
Charter for Regional and Minority Languages was signed by Moldova in 2002, but
has yet to be ratified.

Considerable
challenges remained concerning the functioning of the autonomous region of
Gagauzia. There were tensions between the central authorities and the
autonomous region of Gagauzia due to a lack of clarity in their relationship.
In February 2014 a referendum on the foreign policy orientation of Moldova was
held in Gagauzia, with an overwhelming majority voting in favour of
Eurasian integration. Although the referendum was declared illegal by the
central authorities, it proceeded peacefully. With the OSCE’s support, several
working group meetings were held between the Moldovan Parliament and the Gagauz
People’s Assembly to address structural problems in the relationship between
the central authorities and the Gagauz Autonomous Region, caused by the unclear
legal and constitutional framework. However, attempts to improve the situation
have led to little result so far. A draft law tabled unilaterally by some MPs,
amending certain Moldovan laws to bring them in line with the Law on the
Special Status of Gagauzia, passed its first reading but was not supported by
the Gagauz representatives.

The
network of Roma community mediators expanded considerably during 2014, and
began to make some progress, with half of the intended mediators in place and a
civil society organisation of Roma mediators formed. As expected, even at this
early stage, mediators made important contributions to Roma inclusion at local
level. On the other hand, limited progress was made in integrating several
segregated school areas, with continued work needed in this area in 2015.

Shortcomings
remained on the protection of people involuntarily institutionalised and of
people with mental disabilities. In 2014 the Ministry of Health took
steps to train health professionals in human rights and took a number of steps
to move reforms forward in this area. Some courts, including the Constitutional
Court, provided leadership in indicating where reform should be pursued. One of
the aims of the reform was to achieve a transition towards
deinstitutionalisation and community-based services for people with mental
disorders and disabilities. Measures under the reform included reforming the
guardianship system for people with disabilities, ensuring that the Ministry of
Health’s human rights oversight mechanism for psychiatric institutions works
efficiently and eliminating forced detention of people with tuberculosis or
other diseases.

Moldova
continued to implement the 2012 law on equality. The Equality Council created under this law become operational and,
in March 2014, approved a plan to implement the law on equality. A public information campaign on preventing discrimination and how to
ensure equality continued in 2014. Since its creation, the Council received 108
complaints and examined 79 of them. Twenty-nine decisions were taken, seven of
which related to the private sector and twenty-two to the public sector. The
second parade for the lesbian, gay, bisexual, transgender and intersex
community was held in Chişinău in May 2014: this was the first to be
held without any legal challenge from the Chişinău city authorities.
The Ministry of Interior provided good protection for the demonstrators.

Progress was
made in promoting gender equality, especially on women’s participation
in decision-making. The government approved a draft law on introducing a
minimal representative quota of 40 % for women on the electoral lists of
political parties, but this law has not yet been approved by parliament. Women
held only 20 % seats in the outgoing parliament and the proportion will be
the same in the incoming parliament. Underrepresentation of women in public
life remained an issue: 18.5 % of serving mayors are women, and women hold
17.4 % of seats in district and municipal councils and 28.6 % in
local councils. This was also an issue in the private sector, the third sector
and tripartite mechanisms. Women faced specific barriers on the labour market
and faced a significant pay gap (women’s wages are 87.1 % of men’s wages).
On a positive note, according to the International
Labour Organisation report ‘Women in Business and Management, Gaining Momentum’
2015, Moldova ranks in 10th place for women with management experience, with
44.1 % of all managers in Moldova being women. Moldova’s General Police Inspectorate conducted
information campaigns together with specialised NGOs on the legal framework
governing the prevention of domestic violence. The General Police Inspectorate
also took action towards further reform on gender-based
violence and this was ongoing
at the end of 2014, in
particular as concerns amending practices for prosecuting rape.

The government
approved a child protection strategy for 2014-20 to reduce the number of
children in residential care, to prevent and combat violence against children
and prevent exploitation, and to assist families in balancing work and family
life. Freedom of religion or belief was generally well respected, but
questions remained over discrimination in the restitution of church property,
the privileged role for the Orthodox Church in religious instruction in
schools, and the registration of certain religions or belief communities.

In July 2014
parliament adopted a package of laws to combat extremism in its first reading.
However, concerns remained over the draft law in its current form. These
related to the transparency and inclusiveness of the legislative process,
limitations on due legal process, and the vague definition of extremism, which
opens the way to arbitrary decisions.

Other
governance-related issues

Moldova made
limited progress on depoliticising and professionalising its central public
administration, in the absence of a clear strategy for public
administration reform. The average salaries of civil servants remained low and
the civil service remained structurally weak due to staff moving to the private
sector or to international organisations and because of corruption.

Partial fiscal decentralisation
was in progress, with the new system operating as a pilot scheme in certain regions.
The capabilities of local authorities varied widely due to the high number of
local entities, underscoring the need for public administration reform in
Moldova to include a reorganisation of local government.

Cooperation
on foreign and security policy, regional and international issues, conflict
prevention and crisis management

In 2014 Moldova aligned with 31 out of the 49 EU Common Foreign and
Security Policy (CFSP) declarations (63 %) which it had been invited to
support. In 2013 the figure was 15 out of 32 (88 %).

In
June 2014 the first representative from Moldova was seconded to the EU-led
Common Security and Defence Policy (CSDP) Mission in Mali (EUTM Mali) serving
as the gender and human rights instructor on the mission.

Limited
progress was made on resolving the Transnistrian conflict. In 2014 only two rounds of negotiations in the ‘5+2’ format took
place and several rounds were postponed due to conditions set by Transnistria in response to what it saw as unfriendly legislative measures taken
by the Moldovan authorities. With Russia’s support,
Transnistria continued to resist discussion of security and status issues. As a
result, the parties in the negotiations followed the ‘small steps approach’, mainly
focusing on technical issues on
freedom of movement of people on both banks of the river Nistru, economic
aspects, problems over the functioning of the
Latin-script schools in Transnistria, free access by
Moldovan farmers to fields situated across the main Tiraspol-Camenca road and
the dismantling of the cable car between Rîbniţa and Rezina.

The
overall situation in the security zone remained tense, but stable.

In
June 2014 in order to stimulate business activity in the region, the Moldovan
Government approved exceptions on import/export duties for economic operators
residing on the left bank of the Nistru. In July 2014 the Moldovan
Parliament adopted a declaration on the country’s territorial reintegration in
the context of Moldova’s European integration. In the declaration, the Moldovan
authorities called on Transnistria to take a pragmatic approach to this process
and to refrain from hindering Transnistrian companies’ access to European
markets.

Relations
between the two sides stalled in the second half of 2014 and became
increasingly antagonistic in November and December. In response to stricter
border checks on goods along the border with the Transnistrian segment and
plans to prevent Transnistria-registered vehicles from entering Moldova and
Ukraine, Transnistria introduced an obligatory insurance fee for all vehicles
(including Moldovan ones) entering Transnistria. Simultaneously, Transnistrian
leader Yevgeny Shevchuk introduced a draft law that would introduce visas for
all visitors to Transnistria (requiring prospective visitors to have an
invitation and pay a fee).

3.         ECONOMIC REFORM AND SOCIAL REFORM AND DEVELOPMENT

Moldova’s
economic growth is estimated to have slowed to 2%[1]
in 2014 from 9.4 % in 2013. Agricultural output decelerated in 2014, after
it grew by 40 % in 2013. Other factors slowing growth included uncertainty
over the tensions in Ukraine, numerous Russian trade
restrictions and difficult economic conditions in
Moldova’s main export destinations.

Headline
inflation was 4.6 %, with the inflationary
effect of currency depreciation from 2014 counterbalanced by weaker economic
growth and lower oil and food prices. The sharp depreciation of the
national currency in late 2014 led the National Bank to intervene massively in
foreign exchange markets, which resulted in a significant reduction of its
gross international reserves.

In May
parliament adopted amendments to the law on public debt, state
guarantees and state lending, in line with World Bank recommendations. The
amendments will take effect in 2015. A law on public finances and fiscal responsibility
was adopted in July, aiming to establish a modern system of public financial
management.

The official unemployment rate in the third
quarter of 2014 was just 3.3 % (down from 3.9 % in the same period of
the previous year). The decline was attributed to agricultural growth, which
led unemployment in rural areas to fall from 3.3 % a year earlier to only
1.9 %. The employment rates remain very low (at around 40%), especially
for women. Labour market indicators are distorted due to the high levels of
informality and of emigration. The implementation of the national action plan
for employment, which targets vulnerable groups, began following its approval
in 2013.

The
government adopted the national agriculture and rural development
strategy for 2014‑20. An action plan to complement the strategy is
currently passing through inter-ministerial consideration. It will be paid for
out of the national budget and from other external sources of funding,
including the EU-funded European Neighbourhood Programme for Agriculture and
Rural Development (ENPARD) for Moldova (for which an agreement was signed in
November) and the European Investment Bank.

The adoption of
the 2015 state budget law was delayed due to the parliamentary elections on 30
November 2014. In the meantime a provisional budget is being used, based on and
not exceeding the budget of 2014, but taking into account the financial changes
modifications for 2015.

4.         TRADE-RELATED ISSUES,
MARKET AND REGULATORY REFORM

The EU-28
remained Moldova’s main trading partner, with total trade in goods
amounting to EUR 3.51 billion in 2014.

EU imports increased in 2014 by 20% amounting to EUR 1.16
billion. In contrast, EU exports slowed down, increasing by a mere 3% for the
same time period, up to EUR 2.35 billion in value. A series of trade
restrictions introduced by the Russian Federation and the deepening crisis in
Ukraine slowed down Moldovan exports to those countries, making the EU market
even more important as export destination. The EU Regulation on autonomous
trade preferences, granting unilateral duty-free access to the EU market for
the main Moldovan export products by setting tariff-rate quotas and applicable
until 31 December 2015, was revised in 2014 to include three new tariff-rate
quotas for fresh fruits, which were the products most adversely affected by
Russian restrictions. Following the removal of tariff rate quotas for Moldovan
wine, the value of imports to the EU grew by 10 %.

The EU-Moldova AA/DCFTA was signed in June and has
been applied since September 2014. Moldova started to reduce and/or eliminate
import duties in line with its commitments and adopted implementing provisions
to manage the tariff rate quotas on imports of selected EU products in
November. The timetable for Moldova’s commitments to bring its legislation into
line with the EU acquis also started to apply from September, and
Moldova and the EU began to exchange information on implementation.

Moldova simplified custom procedures and made them more
efficient, including by introducing and implementing an electronic declaration
procedure for imports and exports. Moldova developed the concept of Authorised
Economic Operator (AEO) in August 2014 and started to grant this status to a
first set of applicants. Green
lanes for AEOs were put in place at all border crossing points. These reforms,
together with improved risk assessment processes, aim to decrease clearance
times and the number of physical checks. In order to align Moldova’s
classification system with EU legislation, in July a law was passed on
approving the combined nomenclature of goods, introducing the latest version of
the harmonised system for classification of goods (HS 2012).

On the free movement of goods and technical regulations,
strict rules were introduced for non-food goods. Important pieces of
legislation (amendments to the Law on accreditation and conformity assessment,
amendments to the Law on metrology, a new Law on market surveillance, and
amendments to the Law on general product safety) were drafted and presented to
parliament for adoption. Parliament adopted legislation approximating to the EU
technical regulations for several industrial products. Furthermore, Moldova
progressed on standardisation, having integrated 2 060 European standards in
the domestic framework and withdrawing 1 090 conflicting standards. In 2014 the
National Institute of Standardisation became an affiliated member of the European Committee for
Electro-technical Standardisation and an observer of the European
Telecommunications Standards Institute.

Moldova
made progress on food safety reforms and regulatory approximation of sanitary
and phytosanitary legislation to EU law. Moldova continued to approximate
product-specific rules with the EU acquis and worked on strengthening
its administrative capacity to deal with food safety risks, for which
collaboration with FAO began in September. Furthermore, Moldova submitted in
November the list of those EU laws to which it intends to approximate its
legislation in the food safety area, in line with the Association Agreement.

On company law, new legislation was introduced to improve
procedures for obtaining authorisations, by eliminating the duplication of
powers between central and local authorities, removing conflicting regulations
and facilitating the voluntary liquidation of businesses. The government also undertook a series of regulatory reforms, by
simplifying the procedures for starting a business, getting electricity and
obtaining construction permits. This improved Moldova’s indicators in the World
Bank’s Doing Business report, pushing Moldova’s ranking up from 86th in the
previous year to 78th in the latest Doing Business report.

Structural weaknesses in financial services were partly
addressed by legislative amendments adopted by government decree in July and
September. The National Bank continued to foster
the banking system’s prudent development through continuous improvement of
prudential regulations and banking supervision, including implementation of the
Basel II/Basel III framework. Fundamental shortcomings in the banking sector
management came to the fore at the end of 2014 with two consecutive decisions
by the National Bank to place three major commercial banks under special
administration. The three banks, Banca de Economii, Banca Socială and
Unibank, accounted for about 30 % of total banking assets.

The National Commission for Financial Markets continued to implement
its strategy to develop the non-banking financial market, giving priority to
bringing rules into line with EU directives and strengthening institutional and
operational capacities. In July amendments were introduced to improve the legal
framework for the car insurance market and third party liability insurance, in
accordance with European and international practices.

Amendments to
the competition law were adopted in March to create the necessary
conditions to allow the Competition Council to implement the law and state aid
rules more effectively. The amendments introduced changes in
cross-references to other legislation in order to further strengthen
enforcement of the competition law. A state aid
register was introduced to make state aid decisions more transparent.

An amendment to
the public procurement law was adopted by parliament in June 2014. It
aims at approximating with the EU acquis, notably by providing increased
transparency, oversight of procedures, optimised participation requirements and
complaints management. The Public Procurement Agency of Moldova adopted a
roadmap to implement the Association Agreement/DCFTA.

Regarding intellectual
property rights, Moldova adopted in July a law that regulates the activity
of the State Agency on Intellectual Property. Legislative amendments were also
made on trademarks, on patents, on plant varieties and industrial designs to
ensure compliance with the Association Agreement/DCFTA. Parliament passed a law
on national symbols protecting geographical indications, protected appellations
of origin and traditional specialties guaranteed (TSG).

Guidelines for Public
Internal Financial Control (PIFC) were drafted and internal audit and
internal control capacities were developed; nevertheless the PIFC framework is
not being implemented at the foreseen pace. A programme for the continuous
development of internal audit was established and national internal audit
standards were revised.

Legislation on statistics
was revised in accordance with European standards. The population and housing
census conducted in May 2014 was implemented in accordance with European
requirements. Improvements were noted in the availability and quality of
national accounts, business, environment and external trade statistics and a
quality framework was introduced.

Moldova reformed
its tax system, bringing VAT and excise legislation into line with the EU
acquis and international requirements. Excise duties on tobacco
products, alcohol and energy products were increased, with the aim of gradually
reaching the minimum EU rates by 2025. An action plan
was launched to implement the tax part of the Association Agreement,
covering the period 2014-16. In cooperation with the Ministry of Finance,
Moldova’s tax authority started preparatory work on introducing the Transfer
Pricing regime. The tax authority also launched a comprehensive organisational
modernisation programme and started preparing strategies, aligned with the
Association Agreement Action Plan, to develop key business and IT tools.

The government
adopted a roadmap for improving competitiveness and established a
Council for Competitiveness. A new SME law as well as an action plan to implement the 2015-17
SME development strategy were drafted, and Moldova became the first Eastern
Partnership country to conclude an Agreement with the European Union on its participation in
the Competitiveness of Enterprises and Small and Medium-sized Enterprises
programme (COSME).

5.         COOPERATION
ON JUSTICE, FREEDOM AND SECURITY

Moldova drafted
its 2014-17 national strategy on integrated border management and an
action plan to implement the strategy, for the purpose of applying the Schengen standards on information
exchange in the field of border control. In January, changes were made in
line with Frontex[2]
regulations to the system of monthly information exchange with the central
office of the Border Police Department of the Ministry of Internal Affairs. The
EU Border Assistance Mission (EUBAM) to Moldova and Ukraine made a sustainable
contribution to the development of border management procedures. An inter-institutional group on risk analysis
was created. The technical part of the demarcation of
the Moldovan-Ukraine border was finalised, in accordance with the
Moldova-Ukraine border demarcation plan for 2014. A practical handbook on joint
border patrols was drafted and 248 joint patrols were conducted in the first
five months of the year. Moldova and Ukraine agreed to set up a new
jointly-operated border crossing point in Palanca, which will be built with EU
support.

In the framework
of the EU-Moldova Mobility Partnership, Moldova made good progress on
adopting and implementing migration- and asylum-related legislation and on
making its migration management system more efficient. Of particular
significance were the drafting of a ‘Methodology on combating illegal stays by
foreigners on the territory of Moldova’ (to be approved by ministerial order in
January 2015) and a ‘Handbook on good practices for police on combating illegal
migration’, and the approval of a ‘Blueprint to combat illegal migration on the
territory of Moldova’. Progress was made on dealing
with irregular migration through the opening of three regional offices of the
Bureau for Migration and Asylum’s directorate for combating illegal stays by
foreigners.

The six new
local offices of the Moldova’s Bureau for Migration and Asylum performed well
and recorded an increase in registrations. These were set up in the
Transnistrian security zone to offer additional registration services to
foreigners arriving through the non-controlled segment of the Moldovan border.
Through the work of these offices, the Bureau for Migration and Asylum was able
to gather important migration data, which contributed to its analytical work on
risk analysis.

In September, a
technical group on risk analysis in the area of migration and asylum was
set up. By the end of 2014, the first risk analysis methodology had been
prepared and the extended migration profile report covering the period 2008-13
had been updated. The Bureau for
Migration and Asylum carried out an expert analysis of the information system
on migration and asylum and this served as the basis for the preparation of a
roadmap that is pending approval.

The number of
asylum-seekers in Moldova increased by 50 % compared to the previous year,
but remained manageable overall (245 applications in 2014). The vast majority
of asylum applications in 2014 originated from Ukraine (134 applications).
Amendments to the law on asylum were drafted to transpose EU directives in this
area but they still needed to be presented to parliament for adoption. In
parallel, improvements were made to reception conditions for asylum-seekers and
to the refugee status determination procedure. Samples of travel documents for
refugees were printed. Inter-agency arrangements and the testing process were
launched in December 2014 and the first travel documents are expected to be
issued to refugees and beneficiaries of subsidiary protection in February 2015.

The laws on
social assistance, on social aid and on social services were amended to ensure
that they also cover foreigners, stateless persons and beneficiaries of
international protection. In parallel, Moldova strengthened its comprehensive
policy on integration by approving a blueprint on creating a system for the
integration of foreigners.

The government
incorporated migration into national development strategies in the form of a
proposal for a national action plan on the return and reintegration of Moldovan
migrants. This document became especially relevant following changes in the
Russian immigration legislation in 2013 and 2014, and the consequent return of
thousands of Moldovan migrants. The issue of Russian re-entry bans for Moldovan
migrant workers who violated the new migration legislation became a major
concern for Moldova's government and could have severe economic implications,
as remittances from Russia amounted to nearly 25 % of Moldova’s GDP.

In April, the
visa-free travel regime to the Schengen area for Moldovan citizens with
biometric passports came into force. A national action plan to prevent and
combat abuses of the visa-free regime was adopted and implemented. By
September, over 200 000 Moldovan citizens had travelled visa-free to the
Schengen area. The upgraded Visa Facilitation Agreement continued to apply to
holders of non-biometric travel documents.

On the fight
against trafficking in human beings, standard operating procedures were
developed in line with EU standards and good practices. Instructions on joint investigation teams were approved in July 2014 by an interdepartmental
working group consisting of officials from Moldova’s General Prosecutor’s
Office, Ministry of Internal Affairs, Customs Service and National
Anti-Corruption Centre. On the
implementation of the Council of Europe Convention on Action against
Trafficking in Human Beings, a new action plan on preventing and combating
trafficking in human beings (covering 2014-16) was approved. Despite every effort by the authorities, Moldova continued to be a
source country for the trafficking of men, women and children.

Moldova
eliminated criminal penalties for
drug consumption. The proportion of drug-related crimes decreased and more
focus was put on the recognition of new drugs.

The reform of the Ministry of Internal Affairs and its
subordinated bodies (including the police and border police) was overall
positive. However, no progress was made on reforming and re-organising the Trupe
de Carabinieri (military police-type troops). Therefore, the status,
responsibilities and the role for the Carabinieri within the reformed
structure of the Ministry of Internal Affairs remained unclear and continued to
overlap with those of police officers.

In January 2015
Moldova signed a memorandum of understanding on strengthening cooperation with
Europol, which provides for the creation of a secure line of communications. In
May, Moldova and Europol finalised the operational cooperation agreement which
was signed in December. The ratification of this
agreement would be welcome.

In June the
European Judicial Training Network (EJTN) granted the status of observer to the
National Institute of Justice of the Republic of Moldova.

6.         TRANSPORT, ENERGY, ENVIRONMENT, CLIMATE
CHANGE, INFORMATION SOCIETY, RESEARCH AND DEVELOPMENT AND INNOVATION

A new Road Transport
Code entered into force in September. The new code implemented the basic
requirements of EU directives regarding access to the road transport market,
including licensing of road transport companies and transport managers. The
National Road Transport Agency was reorganised, most notably taking over
regulatory responsibilities for heavy road vehicles and obtaining managerial
and financial autonomy. This enabled the Agency to increase salaries. Experts
reported that the number of overloaded trucks on Moldova’s road had fallen,
thanks to better regulation. Repairs continued on Moldova’s main state highways using loans from international financial institutions. A total of
360 km of road is currently being repaired. Works have already been completed
on three sections with a total length of 147 km and have been launched on four
other sections with a total length of 121.6 km.

Although the
Moldovan fleet remained on the blacklist of the Paris Memorandum of
Understanding on Port State Control, necessary changes to legislation and
operational practice have been identified with support from EU technical assistance.
The port of Giurgiuleşti continued to operate normally despite a legal
battle over ownership and financial claims.

The aviation authorities
worked on implementing the EU-Moldova Common Aviation Area Agreement, using a
three-year EU technical assistance program to support the transposition of the
EU aviation acquis. However, the implementation process slowed due to
problems of coordination resulting from 2013 amendments to the Civil Aviation
Law which brought the Civil Aviation Authority under the political authority of
the Prime Minister’s office rather than the Ministry of Transport. While the EU
has no position concerning to which body the civil aviation authority should be
subordinated, this new configuration in Moldova is creating some problems of
coordination.

In August, Moldova took its first step towards improving its energy
security of supply with the inauguration of the Iaşi-Ungheni gas
interconnector.

The Moldovan
Government continued to focus on integration with the EU single energy
market and addressing its main challenges in the energy sector,
particularly security of supply, accumulated energy debts and low energy
efficiency. Parliament approved amendments to Moldova’s
electricity law in March and amendments to the natural gas law in July, ensuring full transposition of the EU’s Second Energy Package and
the EU security of supply directives and regulations. An assessment of the
resilience to possible Russian gas supply disruptions, according to the ‘stress
tests’ initiated by the European Commission, was carried out and sent to the
Energy Community Secretariat and the European Commission. This assessment
contributed to the report on the stress tests published by the European
Commission in October.

A new law on
promoting renewable energy sources was developed and is in the final
stage of adoption in parliament. This was aimed at establishing new incentives
for such investments. Further secondary legislation would be needed for the new
mechanisms to be fully functional. On energy efficiency, Moldova adopted
laws on energy labelling and on the ecological design
of energy products and improved the administrative capacity of its Energy
Efficiency Agency and Energy Efficiency Fund. The Energy Efficiency Fund
launched two new calls for energy efficiency projects in the public and
the private sector, and Moldova also became a full
member of the multi-donor Eastern Europe Energy Efficiency and Environment
Partnership to which the EU is a major contributor. The
Ministry of Economy is currently implementing nine projects to promote sustainable
development under the Greening Economies in the Eastern Neighbourhood
Countries’ programme.

Moldova continued to work with the World Bank on restructuring
district heating and settling gas debts in this sector. An important step
forward was taken in May with the adoption of new legislation on heating.

In December
Moldova adopted its climate change adaptation strategy and action plan
for 2020. In January, it submitted its third national communication under the
United Nations Framework Convention on Climate Change (UNFCCC) and followed it
up by publishing a research study to complement the ‘Vulnerability and
Adaptation’ chapter of its third national communication. The study focused on
the impact of climate change on Moldovan agriculture. It also published a
range of awareness-raising booklets. A UNDP-led project
was initiated to support the establishment of Moldovan's national adaptation
planning process, according to UNFCCC guidelines, which is expected to be
finalised by 2016. EU Expert support was successfully provided by the EU through the
regional Clima East project. This was used in particular to strengthen the
capacity of policy-makers to contribute to the 2015 Climate Agreement and to
develop mitigation policies.

In May
parliament adopted a law on environmental impact assessment, transposing
an EU Directive on the assessment of the effects on the environment of
certain public and private projects. The Ministry of Environment approved a new
water supply and sanitation strategy for 2014-28 and an environmental strategy
for 2014-23 setting out plans for the future development of the sector. 2014
also saw the drafting of a revised environmental protection law, which is a
framework law providing for comprehensive environmental legislation in line
with EU requirements. The consultative process for the draft law is expected to
commence early in 2015. A National Action Plan for the implementation of the
Association Agreement with the EU was approved in October. The Moldova North
Water Private Public Partnership Project aiming at creating a regional
integrated water supply system in Northern Moldova, with improved quality and
efficiency of water and wastewater services will receive support from the EU
Neighbourhood Investment Facility.

The ‘Digital
Moldova 2020 Strategy’, which is the country’s national information society
development strategy, was implemented with the aim of ensuring
systematic and predictable development based on the principles of the ‘Digital
Agenda for Europe’.

A new Science
and Innovation Code was adopted. One of the main objectives was to
stimulate innovation by fostering applied research and by encouraging closer
cooperation between the academic and the research sectors. In March the
Moldovan Academy of Sciences organised the official regional launch of the
'Horizon 2020' Programme, with the participation of representatives of the
Eastern Partnership. During the preparatory phase, the Academy of Sciences,
working on behalf of the Moldovan Government, drew up the necessary institutional
framework so that Moldovan institutions can participate effectively in Horizon
2020 calls for tender. In July Moldova and the EU signed an agreement on
Moldova’s participation in the 'Horizon 2020' Programme. Moldova is the first
Eastern Partnership country who signed up to the programme.

A collaboration
agreement on nuclear forensics was renewed in 2014 between the EU Joint
Research Centre (JRC) and the National Agency for Regulation of Nuclear
and Radiological Activities of Moldova. JRC was asked by Moldova to provide
forensics support in a criminal case involving trading in radioactive
substances.

7.         PEOPLE-TO-PEOPLE
CONTACTS, EDUCATION AND HEALTH

Moldova continued its educational
reform, with the approval and entry into force of the new Educational Code
and its 2014-20 education development strategy
(‘Education 2020’). However, the lack of qualified teaching staff, inefficiencies and
limited adaptation to the needs of the labour market remained a concern.

The National Agency for Quality Assurance in Professional
Education was established and its interim coordination council was selected.
The government approved a new regulation on doctoral studies that fully
complies with the Bologna process, by bringing doctoral
studies under the responsibility of the Ministry of Education. Moldova made
some financial efforts to stimulate research in
higher education institutions but this could make up for the lack of reform,
with the administration and funding of research still being dealt with
centrally at the Moldovan Academy of Sciences.

A budget support programme
started for vocational education and training. Vocational education and
training institutions were mapped as part of preparatory work to build up
centres of excellence and reorganise the vocational education and training
network. New occupational standards were developed and a pilot project on dual professional training was
launched. However, the new law on professions is still pending approval by
parliament.

Moldova participated in the Tempus programme with
18 on-going projects. 314 students and staff were selected in 2014 for mobility
within partnerships supported by Erasmus Mundus and five students were selected
for a joint master’s degree. One application was selected for funding under the
Marie Skłodowska-Curie actions (MSCA) under 'Horizon 2020'. 47 Moldovan
schools participated in the eTwinning plus project. Young people
and youth organisations benefited from Erasmus +, with 868 participants
in mobility projects and 96 in the action for young people and decision-makers
in the field of youth.

In January
Moldova enacted its ‘Culture 2020’ national strategy for the development of culture.
The strategy and its accompanying action plan for implementation are important
steps towards modernising cultural policy.

Moldova started implementation of its national public health
strategy for 2014-20. Health indicators have slightly improved, with Moldova
seeing a reduction in death rates from disease and increased life expectancy at
birth. Healthcare services continued to be restructured: primary healthcare was
gradually being given more autonomy and hospitals were being regionalised, but
progress was slow and faced obstacles, especially with regard to hospitals.
Private sector participation in the health service increased, especially in
diagnostic services. However, Moldova's healthcare system and public health
services continued to be under pressure from the effects of brain drain, the
early retirement of staff in some areas and problems with the mobility of
doctors and nurses.

Health facility
infrastructure has improved significantly. The new surgical block of the
Republican Clinical Hospital in Chişinău was equipped with the most
advanced medical devices and more than 150 health centres in rural areas were
renovated and supplied with medical equipment. The development of a primary
healthcare information system was being finalised. A
national programme on the prevention and control of cardiovascular diseases and
a national nutrition programme for 2014-20 were approved in September. Tobacco
and alcohol control legislation were being revised, in combination with
continued implementation of alcohol and tobacco awareness campaigns. In July, a package of anti-tobacco bills
aligned with the WHO Framework Convention on Tobacco Control passed its first reading in parliament.

The overall vaccination rate was high, but was declining and there
were wide regional variations. In Transnistria, immunisation and perinatal care
programmes continued to be provided as part of the measures to build confidence
between the two sides in the conflict.

Access to antiretroviral therapy for HIV and treatment for TB
patients improved. Medicines legislation was brought into line with EU
directives, and the capacities of the National Medicines and Medical Devices
Agency were strengthened.

Moldova
continued its technical cooperation with the European Centre for Disease
Prevention and Control (ECDC) under an EU-funded regional project on
preparatory measures to support the participation of ENP countries in ECDC
activities. Moldova nominated a national correspondent for relations with the
ECDC and the national correspondent carried out a short-term expert secondment
there. Moldova participated actively in the first ‘National ECDC Correspondent
meeting’ in May 2014 and also attended technical workshops on HIV/AIDS and
vaccine-preventable diseases and the annual European scientific conference on
applied intervention epidemiology.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

[1] For sources and detailed figures, see
Statistical Annex accompanying the reports; figures without sources are
forecasts by Commission services.

[2] European Agency for the Management of Operational Cooperation at the
External Borders of the Member States of the European Union (Frontex)

[Top](#document1)