Source: EURLEX
Language: en
Format: md

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# 52012SC0118

**JOINT STAFF WORKING DOCUMENT Implementation of the European Neighbourhood Policy in the Republic of Moldova Progress in 2011 and recommendations for action Accompanying the document JOINT COMMUNICATION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Delivering on a new European Neighbourhood Policy /\* SWD/2012/0118 final \*/**

  

1.
Overall assessment and Recommendations

This document
reports on overall progress made in implementation of the EU-Republic of Moldova Action Plan between 1 January and 31 December 2011. Developments outside this
period are also considered when deemed relevant. It is not a general review of
the political and economic situation in the Republic of Moldova. For
information on regional and multilateral sector processes, readers should refer
to the Eastern Partnership report.

The political crisis centring on the
election of a new President continued throughout 2011 and threatened the
sustainability of the reform process. The new President took office on 23 March
2012. Despite some delays in the adoption of important legislation and a considerable
number of implementation problems following important law-making activity in
2010, the Republic of Moldova made good progress in almost all areas of the
Action Plan.

Negotiations on a future EU-Republic of Moldova Association Agreement continued at good pace and the EU agreed in December to
launch negotiations on the establishment of a Deep and Comprehensive Free Trade
Area (DCFTA) as an integral part of the Association Agreement negotiations. The
Republic of Moldova concluded negotiations with the EU on a number of other important
matters, such as customs cooperation, the setting-up of a common aviation area,
the protection of geographical indications and association to the 7th
Framework Programme for Research and Technological Development.

Implementation issues were actively tackled
in particular when this was a pre-requisite for opening DCFTA negotiations or for
pursuing the dialogue on visa liberalisation. The reform of the public service helped
to solve some of the administrative capacity problems highlighted in previous
reports. The reforms of the justice and law enforcement systems initiated
during the year appear to be essential for dealing with issues linked to the
enforcement of fundamental rights. However, there were problems with the new
law on freedom of expression and no progress was made on the adoption of
anti-discrimination legislation. The Republic of Moldova also needs to tackle
corruption more decisively and efficiently.

The Republic of Moldova made important
progress in the implementation of the first phase of the action plan on visa
liberalisation, as reflected in the two assessment reports on the
implementation of the action plan in September 2011 and February 2012[1].

A promising step was made towards the
peaceful resolution of the Transnistria issue with the resumption in December,
under the Lithuanian OSCE Chairmanship-in-Office, of the work of the “Permanent
Conference on political issues in the framework of the negotiating process on
the Transnistrian settlement” (the ‘5+2’).

In 2011, the economy recovered quickly and
macroeconomic stability was maintained. Because of this, the country was able
to continue its successful cooperation with the international financial
institutions. Growth became more sustained and poverty was further reduced, as
stipulated in the Action Plan. However, economic performance slowed down
in the final quarter due to the worsening external environment.

At the same time, the Republic of Moldova took further steps towards becoming a functioning market economy by improving the
investment climate and implementing structural reforms in the energy and
education sectors. Preparations for some large-scale privatisations - another
Action Plan priority - were started. The country topped the list of reformers
in the World Bank’s ‘Doing Business’ Report 2012. However the business and
investment climate remains difficult. Flawed judicial practices allowed
raiders’ attacks to be made on major banking and insurance institutions in the
summer, which harmed the image of the country as a safe place for investments.

The Republic of Moldova successfully held
the rotating Energy Community Presidency and progressed towards meeting its
Community obligations.

On the basis of this year’s report, and
with a view to sustained implementation of the EU-Republic of Moldova Action Plan in 2012, the Republic of Moldova is invited to:

·
Step up efforts to implement the justice and law
enforcement reform strategies, with a focus on human rights protection and the
urgent need to curb corruption; finalise the investigations and judicial action
in connection with the April 2009 events.

·
Engage pro-actively in a pragmatic dialogue with
Tiraspol with a view to setting up effective mechanisms to implement
confidence building activities and making tangible progress towards a
comprehensive settlement of the Transnistrian conflict.

·
Step up the reform of public administration, including
focusing on the enforcement of the laws on transparency and access to
information.

·
Accelerate the privatisation process, in
particular for remaining large state-owned enterprises in telecommunications,
transport, energy and the financial sectors.

·
Continue the long term reforms being undertaken in
the areas of social assistance, health and education (including vocational and
educational training). Further facilitate social dialogue. Strengthen
monitoring and enforcement of labour standards and step up harmonisation with
ILO standards.

·
Continue to advance sector reforms and
regulatory approximation to the EU acquis in trade and trade related areas,
based on the recommendations identified in the preparation for the DCFTA.

·
Continue with energy sector reform, including
strengthening the Agency for Energy Efficiency and implementing the energy
efficiency strategy.

·
Reinforce competition and state aid legislation.

·
Finalise the remaining steps under the first
phase of the EU-Republic of Moldova action plan on visa liberalisation.

·
Step up institutional reform of the aviation
sector and clearly define the reporting responsibilities of the Civil Aviation
Administration.

2.
Political dialogue and reform
Towards deep
and sustainable democracy

In spite of the deadlock over the election
of a President of the Republic in 2011 (resolved only in March 2012), the
Republic of Moldova continued to make progress towards compliance with
democratic principles and the rule of law. Training and organisational measures
were actively implemented to strengthen the key institutions of parliament and
the Central Electoral Commission.

In June, the country
engaged in local elections. They confirmed the improvement of the electoral
environment (the Election Code was amended in March and April), in line with
some of the recommendations of the Organisation for Security and Cooperation in
Europe - Office for Democratic Institutions and Human Rights (OSCE/ODIHR)
issued following the two nationwide polls held in 2010. However, in some places
the lack of appropriate polling equipment affected the secrecy of the vote, and
more generally electoral and political party legislation still needs to be
improved with regard to the funding of parties and electoral campaigns,
complaints and appeals procedures, and voter registration. At the same time,
the Central Electoral Commission set up a Continuous Training Centre to train
staff involved in the organisation of elections.

On freedom of expression, judicial
practice did not catch up with the recent legislative improvements, with
rulings continuing to refer to the Civil Code rather than to the new law on
freedom of expression. The media thus did not enjoy the level of protection
guaranteed by law. On media freedom, the public broadcaster, Teleradio Moldova is being internally reformed into a genuine broadcasting establishment. But it has
shifted Russian-speaking news broadcasts from prime time to a late slot,
causing some inconvenience to Russian speakers. The license of the opposition
TV channel NIT was withdrawn in March 2012.

The legal provisions in force provide a
guarantee to the freedom of association and assembly. Violations
of this right have become an exception. Upon application by the Chisinau City Hall, the Chisinau Court of Appeal relocated the Equality Parade organised by
the Lesbians, Gay, Bisexual and Transgender (LGBT) groups from the centre of
the capital city to a place where it would not attract attention. The group
decided to call off the parade and referred that case to the European Court of
Human Rights to enforce their right to freedom of assembly.

Progress can be reported on justice
sector reform. A comprehensive justice sector reform strategy was adopted in
October, and the related Action Plan was approved by parliament in February
2012. This set the scene for a large EU technical assistance and budget support
(EUR 62 million). During the year, reform of the justice system continued to
receive support through the EU-funded Democracy Support Package.

The ranking of the Republic of Moldova in the Transparency International 2011 corruption perception index fell from 105th
place in 2010 to 112th in 2011. About one quarter of the recommendations
made by the Council of Europe’s Group of States against Corruption (GRECO) have
still to be implemented, including the introduction of; legislation on special
investigation measures; criminal liability of legal entities for corruption
offences; whistleblowers’ protection; an efficient system of control over the
assets and private interest declarations of public officials; and the offence
of misrepresentation of accounting data associated with acts of corruption. In
July, the parliament adopted a national anti-corruption strategy, which was
complemented by an action plan in February 2012; this still needs to be
supported by a clear allocation of resources. At the same time, a comprehensive
legislative and policy anti-corruption framework, aimed at aligning the country
with the main European and international instruments, is at an advanced stage
of consolidation. However, the high number of legislative amendments could
affect legal certainty and create difficulties in implementation if no coherent
vision is ensured.

In July the parliament passed a law
establishing the National Integrity Commission, which will be responsible for monitoring
the assets and private interest declarations of public officials, handling conflict
of interest complaints, and checking observance of the rules on limitations and
incompatibilities in the exercise of public office. By the end of 2011, the law
had not yet entered into force.

Substantial reform of the Centre for
Combating Economic Crime and Corruption (CCECC) was initiated in order to
address concerns about the latter’s powers, organisation and independence. In
mid-November, an EU technical assistance anti-corruption project was launched
to support the reforms under way in the Ministry of Interior, the CCECC and the
National Centre for Data Protection.

No significant progress could be reported on
security sector reform, including police reform. The Ministry of
Interior started to implement its internal reform strategy, adopted in December
2010, with the assistance of an EU high-level adviser.

Conflict
prevention and confidence-building

Good
progress can be reported as regards cooperation on the Transnistrian issue.
Official talks in the ‘5+2’ format resumed in Vilnius on 30 November, with
active participation of the EU. The political representatives from Chisinau and
Tiraspol met regularly, and the Prime Minister met with the Transnistrian
leader a number of times, most importantly in September in the margins of an
OSCE-sponsored conference on confidence building measures. In December a major
political and generational change took place in Tiraspol, when Mr. Shevchuk
replaced Mr. Smirnov as leader of the breakaway region. This may have in the
medium term a positive impact on the negotiating process.

EU support to confidence building
between the two sides was successfully implemented through concrete projects
such as the renovation of a blood transfusion centre and that of a perinatalogy
clinic in Tiraspol. A new package in support of confidence building measures,
worth EUR 12 million, was launched at the beginning of 2012, building on
previous achievements in the fields of business development, environment,
social infrastructures and civil society development.

The Republic of Moldova continued to be
committed to, and participated constructively in, the work of the EU Border
Assistance Mission to the Republic of Moldova and Ukraine (EUBAM). With
EUBAM support, the customs authorities and border guard service of the Republic
of Moldova continued to enhance their professional capacities, as well as
inter-agency cooperation within the country and with Ukraine. EUBAM continued
to support the demarcation of the central segment of the state border between
the Republic of Moldova and Ukraine, which started in December 2009, and coordinated
the successful ‘Akkerman’ joint border control operation. In December, the
Ukrainian government approved the long-awaited decision to authorise joint
patrolling of the border between the Republic of Moldova and Ukraine in the
pilot border section of Rososhany/Briceni. EUBAM also facilitated talks to
resume rail cargo traffic through the Transnistrian region.

Other human
rights and governance-related issues

Limited progress has been made on the protection
of minorities. Discrimination against the Roma population in education,
employment, housing and healthcare takes place with impunity. However, the
government has put in place Roma Community mediators, with the help of UNICEF
and the Council of Europe, and adopted in July an Action Plan on Roma Inclusion
2011-2015, which was subsequently reviewed. Proper costing and budgeting will
be key to ensuring efficiency.

The draft law on combating and preventing discrimination
has yet to be adopted. Discrimination on the ground of sexual
orientation persisted. Limited progress was made as regards the
integration of persons with disabilities. After the adoption of the UN
Convention on the Rights of Persons with Disabilities (CRPD), the government
approved a number of concepts for new social services for adults with mild
mental disabilities. The Optional Protocol to the CRPD was not ratified. A
governmental decision taken in July regulates the provision of special
technical means to persons with disabilities.

On children’s rights, progress was
limited. Largely due to insufficient budget resources, the situation of
children deprived of parental care remained a concern. The number of children
in residential care is decreasing, but remains high (6,900 according to
UNICEF). Despite major legislative changes in 2010, issues such as child labour
and juvenile justice have not been adequately addressed. The juvenile justice
system fails to meet recognised international standards and the vulnerability
of children to trafficking and sexual exploitation is still a significant problem.
Current legislation does not address computer-facilitated offences as required
by the international standards set out in the Council of Europe Cybercrime
Convention 2004 and the Council of Europe Convention on the Protection of
Children Against Sexual Exploitation and Sexual Abuse 2007 (which the Republic
of Moldova has signed but not ratified).

The government continued to implement the
National Programme on gender equality 2010-2015. Labour legislation was
amended in accordance with the revised European Social Charter, to include the
concept of sexual harassment. However, women continued to be under-represented
in both the central and local governments, even though the number of female
mayors slightly increased following the local elections. Despite the improved
legal framework, the mechanisms designed to prevent domestic violence remained
inefficient due both to lack of enforcement of courts’ protection orders, and absence
of a rehabilitation system for the perpetrators. The above-mentioned draft anti-discrimination
law also includes gender as an area where discrimination is prohibited.

Progress was made as regards freedom of
religion. The law on religious organisations was adopted by parliament in
December. In March the Ministry of Justice registered for the first time an Islamic
organisation, the Islamic League of the Republic of Moldova. Members of
religious communities can generally practice their religion freely and without
fear of undue government interference. Still, there remains a certain ambiguity
in the legal framework potentially hindering the right of all people to practice
their religion or belief, alone or in community with others, in public or in
private, regardless of their registration status. Likewise, limitation on the
rights of foreigners to practice religion is not in conformity with European
and international standards. The frequent interference, and in some instances
provocative speeches, by representatives of the predominant religion were not addressed
by the public authorities, giving that church a privileged status at variance
with the constitutional practice of a secular state.

Public administration reform continued to focus government
attention. Strategic development plans for key institutions were developed in
the framework of the Comprehensive Institution Building programme under the
Eastern Partnership. At the same time, the laws on access to information and on
the transparency of the public decision making process continued to be poorly,
or selectively, enforced. On decentralisation, the government and local
authorities started to implement the National Strategy for Regional Development
under the auspices of the new National Coordination Council for Regional
Development. However, progress is being hampered by lack of resources at the
local level.

Regional
cooperation, cooperation in foreign and security policy, conflict prevention
and crisis management

The political dialogue between the
Republic of Moldova and the EU intensified further in 2011, with many
high-level visits and contacts in the bilateral or multilateral format. The
Republic of Moldova aligned itself with 63 out of the EU’s 82 CSFP declarations
during 2011.

In June,
Ukraine and the Republic of Moldova found a negotiated solution to almost all
their disagreements over the demarcation of the northern and southern
segments of their common border. Further efforts are needed to find solutions
to the remaining border issues in particular as regards the Novodnistrovsc
hydroelectric power station.

The Republic of
Moldova, as part of the Danube macro-region, played an important role in
achieving the objectives of the EU Strategy for the Danube Region. It also
participated actively in the European Regional Development Fund South-East
Europe and Central Europe trans-national cooperation programmes.

3.
Economic and social reform
Macroeconomic
framework and functioning of the market economy

After a severe downturn in 2009, the
economy staged a robust recovery and grew by 7.1 % in 2010 and by about 6.4 %
in 2011. The economy was supported by a financing arrangement with the
International Monetary Fund (IMF) and a high level of donor assistance
(including an EU Macro-Financial Assistance grant worth EUR 90 million). In
2011, growth was driven both by strong domestic demand and booming exports that
grew at about 44 % year-on-year. Private consumption increased due to a
double-digit rise in both remittances and domestic credit. The financial
turmoil in the euro area and its recessionary effects on the EU economy may
affect the Republic of Moldova either directly via trade with and remittances
from the EU, or indirectly via the impact of the crisis on Russia.

The average inflation rate in 2011 reached
7.6 % (it was 7.4 % in 2010), driven by the increase in global and domestic
food prices and higher electricity and gas costs. The fiscal consolidation
process continued in 2011 with a budget deficit of 2.4 % of GDP that would be
further reduced to a targeted 0.9 % of GDP in 2012. A number of excise taxes
will be increased together with the reintroduction of a 12 % corporate income
tax.

The current account deficit rose to about
11.5 % of GDP in 2011, but its financing improved due to higher foreign direct
investment and better access to external finance by the private sector.
Official reserves increased to around USD 1.96 billion (EUR 1.5 billion)
covering 4.5 months of imports. The banking system remained stable and well
capitalised with a capital adequacy ratio above 30 %. The rate of
non-performing loans declined, but balance sheet vulnerability still remains.

Employment and
social policy

The unemployment rate declined to 6.6 %
(from 7.4 % in 2010) driven by job creation in industry and agriculture. The government
approved a National Action Plan on Employment in February. An Action Plan to tackle
‘illegal work’ was launched in June.

In September, the Republic of
Moldova ratified the International Labour Organisation (ILO) Convention No. 160
on labour statistics.

In the area of social protection,
the number of beneficiary households for the new cash-benefits system of social
aid was extended to reach around 72.000 people at the end of 2011 (there were
47.000 in the period March-May 2011). Social allowances paid to families with
children were increased in June. In March and November respectively,
authorities introduced a heating allowance for vulnerable persons and
strengthened the system of cash benefits in case of sick leave. A new National
Social Inspectorate was set up in October.

The Republic of
Moldova raised the minimum guaranteed income from MDL 530 to 575 (being
equivalent to EUR 37) as of July. In June, the Republic of Moldova adopted
legislation on pension reform with the aim of increasing the minimum
duration of mandatory contributions and the retirement age for certain
categories.

No progress was
registered in the area of labour standards and trade unions' rights, and
monitoring and enforcement of labour standards should be substantially
strengthened. While the existing law on trade unions provides for basic social
rights, a number of its provisions restrict the registration of unions. Rules
on arbitration do not fully comply with ILO standards and there are no
sanctions for violations of the right to association.

Social
dialogue needs to be strengthened; there is not yet
an institutional mechanism for regular consultations with social partners.

In the area of agriculture, the
Agreement between the EU and the Republic of Moldova on the protection of
Geographical Indications was initialled in April 2011.

4.
Trade-related issues, market and regulatory
reform

In 2011 the EU was the Republic of Moldova’s
main trade partner. In 2011, the volume of bilateral trade between the EU and
the Republic of Moldova increased by 27.9%. EU imports from the Republic of
Moldova, which were dominated by agricultural products (32.4%), clothing
(21.0%) and machinery and transport equipment (10.3%), increased by 44.5%.  EU
exports to the Republic of Moldova, which consisted mainly of machinery and
transport equipment (32.9%), fuels and mining products (15.1%) and chemicals
(12.4%), increased by 21.6%.

The Republic of Moldova continued its
preparations for negotiation of a Deep and Comprehensive Free Trade Area (DCFTA),
through the implementation of the DCFTA related key recommendations. In
December, the EU concluded that the progress made by the country was sufficient
to launch the negotiations. The first  round of negotiations took place in
March 2012. However, the Republic of Moldova is expected to continue to conduct
reforms in the trade-related areas, if it is to fully benefit from the future
DCFTA.

In order to ensure the use of the
preferential tariff rate quotas offered by the European Union under the System
of Autonomous Trade Preferences, the Moldovan government prepared a decision on
the administration of tariff quotas for the export of goods to the EU.

The Customs Service underwent a modernisation process in 2011. A Strategic Programme for 2012-2014
is being drafted, with the main emphasis on the development of the performance
management system. The Republic of Moldova implemented a pilot project on the Automated System for Customs Data
(ASYCUDA). As of August 2011, the Republic of Moldova
grants privileges to authorised operators that comply with specific
requirements. A simplified
local clearance procedure providing for minimal control of import/export
transactions was implemented. The EU and the Republic of Moldova signed a
Strategic Framework for customs co-operation in October. The Republic of
Moldova drafted amendments to the Customs code, the law on customs tariff and the
law on free economic zones in order to align its customs legislation with EU
standards by abolishing domestic origin and the exemption from payment of
customs duties on foreign components of products produced in the free economic
zones. The Republic of Moldova participated in the "FIREBLADE" joint
customs operation targeting trafficking of counterfeit goods at the EU Eastern
border.

The Republic of Moldova made significant
progress in reducing technical barriers to trade. It adopted 17
international and European standards and a timetable for transposition of
additional standards, transposed the New Approach directives and withdrew
conflicting national standards. The Republic of Moldova progressed towards
affiliation to the European Committee for
Electrotechnical Standardisation  and became an
affiliated member of the International Electro-technical Commission  in
November. Furthermore, the government submitted to the parliament amendments to
the law on Standardisation, a draft law on Accreditation and Conformity
Assessment Activity, and amendments to the law on Metrology.

The Republic of
Moldova continued gradually to move closer to EU sanitary and phytosanitary
(SPS) standards. In October, it adopted a food safety strategy for the period 2011-2015,
which includes the establishment of a food safety authority and a plan for
approximation with EU standards. The strategy was subsequently complemented
through an accompanying document and an action plan for approximation to the EU
acquis in the SPS area.  The Republic of Moldova adopted sanitary and phytosanitary
and border controls related legislation. It trained staff, with EU support. In
October, the European Commission’s Food and Veterinary Office carried out a
mission to the Republic of Moldova on residue control in live animals and
animal products and control of veterinary medicinal products. The mission
showed that further progress was being made. The Republic of Moldova needs to
implement fully its food safety strategy.

The Government began drawing up a National
Development Strategy ‘Moldova 2020’, focusing on economic growth. One of the
seven priorities of the strategy aims at improving the business environment.
In this area the Republic of Moldova made progress in 2011. Reforms included; the establishment of a one-stop shop for
businesses at the State Registration Chamber; more efficient enforcement of
judgments; amendments to the insolvency law; and the establishment of the
country’s first private credit bureau.

In the domain of financial services,
the government submitted to the parliament in August amendments to 53
legislative acts, including the law on the National Bank. They
set out sanctions and remedial measures; regulate the procedure for detecting
violations and associated sanctions and remedies; and regulate the
implementation of decisions. The parliament approved the Strategy
for the Development of the Non-banking Financial Market for 2011-2014 with an action
plan. In May, the government proposed amendments to the laws on Insurance and
on Compulsory Motor Third Party Liability, approximating to the EU Directive on
insurance mediation. The National Commission of Financial Markets approved in
July the integration of the National Securities Depositary into the Automated
Inter-banking Payment System. The government set up a national committee for
financial stability (crisis management team). The National Bank and the Ministry of Finance signed in December an
action plan on the capitalisation of the National Bank.

Company law, movement of capital and
accounting rules did not undergo substantial
changes. Amendments to the Law on auditing introduced the International
Standards on Auditing and the Code of Ethics as of 1 January 2012.

Other key
issues

The tax reform produced
results in line with commitments to the IMF. The Republic of Moldova made some progress in harmonising the
national tax policy with EU tax policy. The threshold for mandatory
registration for Value Added Tax was doubled.

The Republic of Moldova prepared draft competition
laws covering anti-trust and mergers as well as state aid. The Republic
of Moldova will need to continue improving and effectively implementing the
competition rules, including through the adoption of secondary legislation, and
to clarify which authority is responsible for state aid control.

In August, the legislation was amended to
allow the authorities to take ex-officio action to protect intellectual
property rights. As of November 2011, the Customs Service had accepted right-holder
applications to protect 310 intellectual property rights, as compared with 172
in 2010 and including 250 registered by foreign right holders. In April, the
Republic of Moldova ended its membership of the Eurasian Patent Convention. In
December, the country’s request to the European Patent Office for a Cooperation
and Extension Agreement was approved. The Republic of Moldova drafted, with a
view to approximation with EU rules, amendments to the laws on medicines and on
pharmaceutical activity.

The government approved a public
procurement action plan for 2011-2013. The Agency for Public Procurement,
benefiting from an EU funded twinning project, drafted a Regulation on the
common vocabulary of public procurement, a law on the exclusion of local
preferences and a guide for contracting authorities. The development of
e-Procurement was put on hold due to lack of funds.

The National Bureau of Statistics
submitted to the Ministry of Economy detailed trade statistics for the last
three years, converted to the current year's tariff nomenclature of the
Republic of Moldova, including an estimate of the data concerning Transnistria.
In spring 2011, the first general agricultural census was conducted on the
whole territory of the Republic of Moldova; first results were made public in
July. The new version of the national Classification of Activities in the
Economy of the Republic of Moldova, compliant with the EU statistical nomenclature
for economic activities, was approved and is being implemented. Efforts in 2012
should focus on the proper implementation of the population census, data
processing and publication as well as on the start of implementation of the
Strategic Plan for the development of the statistical system.

The regulatory framework for enterprise policy saw no substantial changes in 2011.

The law on
public finances improving the budget preparation and execution and the law
on public internal financial control entered into force in November. The
government submitted in October the draft law on Fiscal Management and Accountability
to the parliament. Updates to the Standards for Internal Audit in the public
sector were approved in May. The Ministry of Finance passed a public sector
audit reporting regulation in September.

External
audit was reinforced in July, as the parliament
approved an increase in the number of the Court of Accounts’ staff. The Court
completed the shift from external financial control to regularity audit, in
accordance with international standards.

5.
Cooperation on Justice, Freedom and Security

In 2011, the EU and the Republic of Moldova
cooperated intensively on justice, freedom and security matters, with a strong
focus on mobility.

Following presentation by the EU to the
Republic of Moldova of the Action Plan on Visa Liberalisation in
January 2011, a First Progress Report on implementation by the Republic of
Moldova was issued in September 2011. The Second Progress Report was issued in
February 2012.

Implementation of the EU-Republic of
Moldova Visa Facilitation and Readmission Agreements continued, and was monitored
at the meetings of the respective Joint Committees in May. The negotiations on
amendments to the EU-Republic of Moldova Visa Facilitation Agreement were
concluded in February 2012.

Cooperation between the EU and the Republic
of Moldova further evolved under the Mobility Partnership. A number of
new initiatives were launched in areas such as strengthening mobility of health
professionals or tackling the social consequences of migration. Work continued
on the development of an Extended Migration Profile. A high level Mobility
Partnership meeting took place in November 2011 and focused on reviewing the
progress made so far and on identifying areas for future cooperation.

The Republic of Moldova made good progress
in adopting migration and asylum related legislation and establishing an
efficient migration management system. A comprehensive strategy on migration
and asylum was adopted in July, accompanied by an action plan in November. The
Republic of Moldova established a ‘one-stop shop’ within the Bureau for
Migration and Asylum aiming at facilitating visa, residence and work
application procedures. The law on integration of foreigners and the law on
accession to the Convention on the Status of Stateless Persons were adopted in
December, as was the law on accession to the Convention on the Reduction of
Statelessness. An important remaining gap in the asylum procedure concerns the
lack of travel documents for refugees.

Key steps were taken towards establishing a
modern border management system. In May, the Republic of Moldova approved an action
plan for the implementation of the National Strategy on Integrated Border
Management for 2011-2013 and in November it adopted the law on the State
Border. The law on Border Police was adopted in December. Legislation adopted
in June added provisions to improve the security of biometric passports. The EU
provided support to buy equipment for the introduction of biometric passports.

Final adoption
by parliament of a framework law on preventing and fighting organised crime
is pending; in June and November respectively, the government adopted a strategy
and an action plan for 2011-2016 in this area. Implementation of the 2010-2011
action plans to counter trafficking in human beings continued. Increased
action is required to raise public awareness and provide assistance to, and
protection of, victims of trafficking. The institutional framework is well established.
The Centre for Fighting Trafficking in Human beings is fully operational.  An
updated action plan for 2012-2013 on combating trafficking in human beings is being
prepared.

In April, the
Republic of Moldova adopted a new law on preventing and fighting money
laundering and the financing of terrorism. The April 2011
report of the Council of Europe’s Moneyval Committee acknowledged the steady
progress of the Republic of Moldova in the areas of customer diligence and
reporting. Since July, the Republic of Moldova is no
longer subject to special monitoring by the Financial
Action Task Force.

In January, the Republic of Moldova
launched a National Anti-Drug Strategy for 2011-2018 and an action plan
for 2011-2013. Implementation is the task of a new National Anti-Drug
Committee, established in June 2011, which also coordinates actions with civil
society organisations. The September EU-Republic of Moldova Drugs Dialogue
explored further cooperation avenues. In October the Republic of Moldova
indicated its interest in enhancing cooperation with the European Monitoring
Centre for Drugs and Drug Addition through a memorandum of understanding.

The Republic of Moldova revised its data
protection legislation in July 2011, with the aim of aligning it to the EU acquis
and Council of European conventions. The 2011 Additional Protocol to the
Council of Europe Convention for the Protection of Individuals with regard to
Automatic Processing of Personal Data was signed and ratified in June. Work
started on assessing new legislation with a view to concluding cooperation
agreements with EUROPOL and EUROJUST.

With regard to judicial cooperation in
civil matters, there has been no progress on accession of Moldova to some Hague
Conventions such as the conventions on judicial assistance (1965 Convention on
the Service Abroad of Judicial and Extrajudicial Documents in Civil or
Commercial Matters and 1970 Convention on the Taking of Evidence Abroad in
Civil or Commercial Matters) and on child protection (1996 Convention on
Jurisdiction, Applicable Law, Recognition, Enforcement and Co-operation in
respect of Parental Responsibility and Measures for the Protection of
Children).

6.
Transport, energy, environment, the information
society, research and development

In the transport sector,
after initial delays, implementation of the Road Sector Programme Support
Project Agreement co-financed by the EU, the European Investment Bank, the
European Bank for reconstruction and Development and the World Bank was
finalised in 2011. The procurement procedures were completed and the relevant
contracts were signed. A new law on
Road Transport is being drafted. Road safety remains an issue of concern. During 2011 preparatory work for the major
restructuring of the railways started with the separation of accounts; it also
encompasses transfer of assets and functions not related to core business to
the municipalities and other entities. As a first result of management reforms,
revenues from freight traffic started to increase substantially in 2011. In
October the Republic of Moldova and the EU initialled a comprehensive air
services agreement, which will open up and integrate their markets and
strengthen cooperation on safety and security. The Republic of Moldova needs to
take corrective actions in order to address a number of aviation safety
problems identified by the European Aviation Safety Agency in 2009 and 2011. Institutional reform of the aviation sector has been slow, and the
reporting responsibilities of the Civil Aviation Administration still need to
be defined. The Moldovan fleet continued to figure in
the high risk category of the black list of the Paris Memorandum of
Understanding on port state control.

2011 was a significant year for the energy
sector in the Republic of Moldova, which held successfully the rotating Presidency
of the Energy Community. To meet its Energy Community obligations, the Republic
of Moldova further developed legislation. It pursued work to update its energy strategy and took steps to improve the
difficult financial situation in the energy sector. The regulator increased
heat, gas and electricity tariffs and adopted a methodology for transmission
tariffs. The Republic of Moldova decided to merge the combined heat and power
plants with the district heating company Termocom. It also decided to
reorganise Moldovagaz into three companies (supply, transmission and
distribution).

The Republic of Moldova continued to engage
with Gazprom on the accumulated gas debts, including in relation to
Transnistria. The Republic of Moldova and Gazprom initiated negotiations on new
gas supply and transit contracts. Feasibility studies were completed for the construction of the Ungheni-Iasi
gas pipeline and the Balti-Suceava high-voltage electric line. Together with
Ukraine and Romania, the Republic of Moldova requested EU financing for a feasibility study on the synchronous
interconnection of the Moldovan and Ukrainian power systems to the European
Network of Transmission System Operators for Electricity (ENTSO-E), the continental European
power system. In November, the Republic of Moldova adopted an energy
efficiency programme for the period down to 2020. An Agency for Energy
Efficiency was set up. The EU launched in December 2011 a budget support programme
of EUR 42.6 million to help the reform of the energy sector. The programme
focuses in particular on energy efficiency and renewable energy.

Regarding climate
change, the Republic of Moldova has completed, but not yet adopted,
strategies on low emissions development and on adaptation. No
new Clean Development Mechanism projects were registered at the UN level,
leaving the overall number of registered projects at four. The Republic of Moldova is encouraged to build
capacity and engage in the new carbon market
mechanism to be developed following the United Nation Framework
Convention on Climate Change 17th Conference of the Parties. It is also encouraged to fully implement the
Cancun and Durban agreements and in particular devise a low carbon development
strategy including updated information on targets to be met or actions that it
will implement.

The Republic of Moldova started preparing
an environment strategy for 2012-2022. Framework legislation on
environmental protection as well as on environmental impact assessment is still
pending. Strengthening of administrative capacity at all levels remains a major
challenge. A state-of-the-environment report
was published and the Ministry of Environment adopted a
communication strategy. The Republic of Moldova also
adopted a plan for 2011-2015 to implement the Aarhus Convention. In June, the
Republic of Moldova hosted the Convention’s Meeting of the Parties. There
were no significant developments on the ratification
of, or accession to, relevant environment related protocols of the United
Nations Economic Commission for Europe (UNECE). The
Regional Environmental Centre continued its activities in the Republic of Moldova
as a small scale entity, with support from the Ministry of Environment. The
EUR 50 million EU-financed sector budget support programme in the
field of water continued to be implemented. In that context, a new Water law
was adopted.

In the field of
civil protection, the Republic of Moldova intensified its cooperation with the
countries from the region and the exchange of best practices with the EU
through its participation in the EU Programme for Prevention of, Preparedness
for, and Response to natural and man-made disasters).

In the information society sector, the Republic of Moldova
approved in June 2011 the National Plan for Number Portability, to be
implemented in three stages between 2011 and 2013. This will promote
competition on the electronic communications market, in particular the fixed
telephony market. The National Regulatory Agency for Electronic Communications
and Information Technology pressed on with regulatory reform and the market
analysis process, approving a set of ex ante obligations for Moldtelecom (the
incumbent operator) due to its significant market power on a number of markets,
in particular allowing for better access to the network of the incumbent
operator.

The Audiovisual Coordination Council
is implementing an action plan in accordance with the government programme of
support for democracy. The digital TV switch-over policy and regulatory
framework is in place. New broadcasting licences are subject to open tender.

In the area of research and innovation,
a Memorandum of Understanding for associating the Republic of Moldova to the
7th Framework Programme for Research and Technological Development (FP7) was
signed in October and entered into force in January 2012. The Republic of
Moldova became the first Eastern Partnership country to associate to FP7 and
the second ENP country, after Israel, to associate to the Programme. The
Academy of Sciences of the Republic of Moldova has implemented a comprehensive
action plan to prepare the research community for the opportunities that association
to FP7 will offer; further actions are needed to ensure that such association
is successful. At the same time, the Republic of Moldova has continued to
increase, albeit at a moderate level, participation in FP7. Currently, 27 Moldovan
research organisations participate in 22 FP7 projects, receiving over EUR 1.95
million of EU funding. This includes the participation of six institutions and
11 individual researchers from the Republic of Moldova in researcher mobility
actions under the Marie Curie scheme. The network of FP7 National
Contact Points has been strengthened considerably over the last year; the
Republic of Moldova is encouraged to appoint further National Contact Points to
ensure that all areas of FP7 are covered.

As
regards Regional Policy, a number of regional policy dialogue initiatives have
been undertaken since an agreement with the Commission was signed in
2010. Improvement of regional statistics and the development of regional
planning and regional development projects pipelines in 3 regions are the
objectives of the Pilot Regional Development Programmes to be
supported from 2012.

7.
People-to-people contacts, education and health

The Republic of Moldova drew up, following
public discussions, a revised Code of Education, which is in its final
stages of adoption. Work progressed on developing a National Qualification
Framework for Higher Education, in line with the European Qualifications
Framework (EQF). Further reforms are necessary on the third cycle (doctoral
studies) where the Bologna Process requirements have not yet been extended.

Higher
education reform continued to benefit from EU
cooperation through Tempus IV programme support and one additional
project involving the Republic of Moldova was selected in 2011. The country
continued its active participation in the Erasmus Mundus programme in
the academic year 2011-2012, with the award of a total of 182 scholarships and
mobility grants. Two additional European integration modules were selected
under the 2011 Jean Monnet Programme, which fosters teaching and
research in the field of EU integration studies.

In 2011 the vocational
education and training sector became a priority, in line with the new
National Development Strategy 2012-2020. Progress included the launch of two
working groups led by the Ministry of Education to prepare a National
Qualification Framework; the finalisation of a national format for occupational
standards; and the elaboration of a concept on the validation of non-formal and
informal learning.

Preparations
began for the participation of the Republic of Moldova in the eTwinning
component of the Comenius programme, the EU programme for
interconnecting schools, planned for 2012, with the selection of the partner
support agency and an assessment of potential beneficiaries/schools.

Substantive
progress was made on cultural policy regulation. The government prepared
or approved regulations concerning the conservation and restoration of historic
monuments, the organisation of archaeological excavations and the export/import
of cultural goods. A law on protection of the national movable cultural
heritage is under preparation. The Republic of Moldova participated in
four projects under the 2010 Special Action for ENP countries under the Culture
Programme, which are running until 2012.

Very positively, the number of young
Moldovan citizens and youth workers benefitting from the
exchange opportunities under the Youth in Action programme increased
from 247 in 2010 to 329 in 2011.

Health
sector reform continued in the Republic of Moldova, with EU budget support (EUR
43 million). The country reconstructed (primary) health care facilities,
strengthened its health information system and improved its surveillance of
communicable diseases. The availability of sufficient financial means and
health workers remain a particular challenge. The Republic of Moldova adopted
rules on the transplantation of organs, tissues and cells of human origin in
line with EU standards. It also adopted programmes to fight diabetes, to
strengthen the public health service, and to enhance emergency care. It
continued addressing HIV/AIDS and tuberculosis challenges, and participated in
the Commission’s HIV/AIDS think tank.

[1]               SEC (2011) 1075 final and SWD (2012) 12 final.

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