Source: EURLEX
Language: en
Format: md

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# 52011SC0643

**JOINT STAFF WORKING PAPER Implementation of the European Neighbourhood Policy in 2010Country report: Republic of Moldova JOINT STAFF WORKING PAPER Implementation of the European Neighbourhood Policy in 2010Country report: Republic of Moldova /\* SEC/2011/0643 final \*/**

  

JOINT STAFF WORKING PAPER

Implementation of the European
Neighbourhood Policy in 2010
Country report: Republic of Moldova

1.
Overall assessment

The Republic of
Moldova and the European Union first established contractual relations in 1994
through a Partnership and Cooperation Agreement, which entered into force in
1998. On that basis, an EU-Republic of Moldova Action Plan was adopted in
February 2005 for a period of three years and was extended by mutual agreement
from February 2008 onwards. In order to provide further guidance for the
implementation of the ENP Action Plan, a reform priorities matrix was tabled by
the EU side in May 2010, and a yearly implementation tool was adopted at the
EU-Republic of Moldova Cooperation Council of June 2010.  In the context of the
Eastern Partnership, negotiations on a future EU-Republic of Moldova
Association Agreement were launched in January 2010, and negotiations since
then have been progressing at a very good pace.  This Agreement is conceived by
both Parties as illustrating the most advanced and ambitious approach to the
Eastern Partnership vision of association, including a Deep and Comprehensive
Free Trade Area and a comprehensive programme of approximation to EU acquis.
The negotiations on a Deep and Comprehensive Free Trade Area (DFCTA) will
start, in the same framework, once the necessary conditions have been met.

Close
cooperation, including at the various levels of the Cooperation Council, the
Cooperation Committee and its four subcommittees, enabled both sides to steer
the implementation of the Action Plan in 2010. This document reports on overall
progress made in the implementation of the EU-Republic of Moldova Action Plan
between 1 January and 31 December 2010. Developments outside this period are
also considered when deemed relevant. It is not intended to be a general review
of the political and economic situation in the Republic of Moldova.

Notwithstanding the unresolved political
stalemate over the election of the next President of the Republic, the Republic
of Moldova made good progress overall in most areas of the Action Plan.
Progress was achieved in the legislative field as well as at the implementation
level. Efforts were initiated to address the administrative capacity problems
underlined in previous Progress Reports. The Republic of Moldova ratified,
without territorial reservations, the Rome Statute of the International
Criminal Court. Thanks to a dynamic and constructive political dialogue and
cooperation with the EU, the Republic of Moldova was able to secure an
unprecedented level of assistance from its international partners for the coming
years. At the same time, the underlying political uncertainty and resource
constraints prevented large-scale reform. More sustained efforts are needed to
fight corruption, to reform the judiciary, prosecution and police, and to
implement certain human rights commitments.

The structural vulnerabilities of the
economy of the Republic of Moldova severely exposed it to the global crisis. In
2010, with large international financial support and the start of the recovery,
the tasks of maintaining basic living standards whilst consolidating public
finances – both reflected in the Action Plan – proved somewhat easier to
achieve. The authorities maintained strict macroeconomic policies and launched
structural reforms. By the end of the reporting period, a post-crisis return to
the macro-economic objectives set out in the Action Plan was well underway.
This allowed the EU to disburse significant macro-financial assistance to the
country. However, progress towards improving the functioning of the market
economy and the business and investment climate through reforms aimed at
achieving transparency and predictability of business conditions – another
Action Plan objective – was too limited to bear fruit.

The EU proposed an Action Plan on Visa
Liberalisation in January 2011.

The Moldovan authorities and civil society
representatives participated actively in the multilateral framework of the
Eastern Partnership, in particular through open dialogue and their contribution
of the working programmes for the four thematic platforms.  Together with the
bilateral elements of the Eastern Partnership, this contributed to the
strengthening of EU-Republic of Moldova relations and reinforcement of the
follow-up on the priorities of the ENP Action Plan.

Finally, EU-Republic of Moldova cooperation
on all issues pertaining to the Transnistria issue has remained good throughout
the year. The Republic of Moldova continued to play a
constructive part in the five informal meetings of the so-called “5+2” format,
despite the fact that these efforts did not bring real progress towards the
resumption of official talks. The Republic of Moldova and the Transnistrian
de-facto authorities lent their coordinated support to the EU-sponsored
confidence building efforts. The EU Border Assistance Mission to Moldova and
Ukraine (EUBAM) has continued to operate smoothly.

2.
Political dialogue and reform

The political dialogue between the Republic
of Moldova and the EU was intense, with many high-level contacts. In January
2010, at the initiative of France and Romania, an informal “Group of EU ministers
for the European Action of the Republic of Moldova” was set up in Brussels as a
ministerial forum to advise the Republic of Moldova on its EU integration path;
it met again in Chisinau in September.

Political consultations also took place
between the Moldovan government and the EU Political and Security Committee,
the Council Working Party on Eastern Europe and Central Asia (which visited the
Republic of Moldova in September 2010), and the EU Political Directors. The
EU-Moldova Parliamentary Cooperation Committee convened twice.

Democracy and the rule of law

The Republic of Moldova managed to make
progress towards compliance with democratic principles in a year of
severe budget constraints and in the context of protracted political crisis
linked to the election of the President of the Republic. The resolution of this
crisis through an inclusive process of political consultations among the
country’s main political forces remains essential, notably for ensuring the
sustainability of the reform process. In particular, training and
organisational measures were implemented to strengthen the parliament and the
operation of the Central Electoral Commission – key institutions for the
Republic of Moldova’s democratic development.

During the year
the country engaged in two major polls: first, a referendum in
September to introduce a system for electing the President by universal suffrage;
second, following the failure of the referendum as the
minimum voter turnout requirement was not reached, pre-term parliamentary
elections in November. The Organisation for Security and Cooperation in Europe
- Office for Democratic Institutions and Human Rights (OSCE/ODIHR) Election
Observation Mission, which was present throughout the process, concluded that
the elections “met most OSCE and Council of Europe commitments”. In particular
it noted that the media ensured that a “broad range of political views and
election information” was available to the electorate. Nonetheless it
underlined the need for further efforts “to strengthen public confidence in the
democratic process”.

The Election
code was amended in June and September 2010, in order to address a number
of deficiencies previously identified by the Venice Commission and the
OSCE/ODIHR. Weaknesses remained with regard to the public control of campaign
financing and the quality of voters’ lists. If properly established and
maintained, the centralised electronic voter register to be set up by law in
2011 could address the latter issue. An amendment
modifying the mandate allocation method was strongly challenged by the
parliamentary opposition. The timing of its adoption – four months before the
elections and without public consultation – was widely perceived as being designed
to benefit the parties in power, and was qualified by the OSCE/ODIHR as a
breach of the Venice Commission’s Code of Good Practice in Electoral Matters.
Nonetheless, the Secretary-General of the Council of Europe and the President
of the Venice Commission noted that the amendment did “not appear as an
obstacle to the holding of free and fair elections”.

Public administration reform was given new impetus. An e-government
Centre was created, with the streamlining of public service delivery as its
objective. Institutional development planning methods were revised ahead of
major capacity-building efforts which will be supported in part by the
Comprehensive Institution Building Programme under the Eastern Partnership.
However, reform was slowed down by a long process of re-organisation and the
unfinished reform of the civil service. Regarding decentralisation, a
National Strategy for Regional Development was approved in March 2010 and the
process of implementation was launched under the auspices of the new National
Coordination Council for Regional Development. However, progress was hampered
on the ground due to lack of resources at the local level.

In the field of
regional policy dialogue Commissioner for Regional Policy J. Hahn signed
a joint declaration with Prime Minister V. Filat during a visit in July 2010. However,
new elections, government changes and uncertainty about ministerial structures
delayed approval and implementation of a work programme until March 2011.

Steps were taken to
improve the justice system and strengthen the rule of law. In
July 2010, the Law on the Status of Judges was amended to increase judges’
responsibility, with mixed results. The self-governing bodies of the judiciary
were re-cast, in line with a decision of 2008. The implementation of a
comprehensive judicial information system, ensuring the random distribution of
cases, the recording of court sittings and the publication of court rulings,
continued. However, the parliament did not abolish the widely-criticised
specialised economic courts. Furthermore, an ongoing conflict between the
executive and parliament, on the one hand, and the Supreme Court of Justice, on
the other hand, diverted efforts away from reforming the judiciary.

The Law on the Bar was amended to create a
self-governing body for lawyers, introduce a system of mandatory training,
reform the apprenticeship system, and forbid representation in court by
non-lawyers. A corps of private bailiffs was created in June 2010 to improve
the execution of judgments. A Superior Council of Public Prosecutors was
established, but further reform of the prosecution was delayed. In November
2010 the government adopted a police reform concept which, if implemented,
should lead to improvements in the way police investigators operate. No
progress can be reported with regard to the implementation of the Law on
Mediation.

The National Institute of Justice stepped
up its training and qualification activities for judges and prosecutors.
Nevertheless, the existence of a parallel qualification system at the Superior
Council of Magistrates, and the direct appointments of judges, continue to
raise questions as to the consistency and cost efficiency of public policy in
this area.

The main challenge in reforming the justice
system remained the limited resources available. While access to justice
continued to be improved, with the introduction of a ceiling on case
registration fees, other shortcomings of the legal aid system - mainly the lack
of resources for its administration - were not addressed. In September 2010 the
government adopted an action plan on the funding of the judicial system which
began to address resources constraints.  The EU, throughout the reporting
period in this domain, consistently provided assistance to the Republic of
Moldova in this important area, and it remains committed to continue to do so.

Only limited progress was observed in the
fight against corruption, and more sustained efforts are needed. Awareness-raising
campaigns continued; a new version of the Anti-corruption action plan was
approved in May 2010 and a Civil Council was established to monitor the
activities of the Centre for Combating Economic Crimes and Corruption. The
enforcement of the legal framework remained a primary concern: the Council of
Europe’s Group of States against Corruption (GRECO) concluded that five of its
six recommendations made in 2008 (second evaluation round) required further
work. The GRECO Report for the third evaluation round comprised all in all 17
recommendations, pointing out the need for further amendments to the criminal
law framework and for additional steps to ensure a more transparent party
funding system and a new independent and effective mechanism for supervision of
financing of political parties and electoral campaigns. Overall, the
track-record of high level corruption cases is unsatisfactory. Coordination of
law enforcement agencies, information exchange, parallel financial
investigations and asset recovery remain problematic.

Human rights and fundamental freedoms

In March 2010 the Republic of Moldova and
the EU initiated a structured dialogue on human rights. In September
2010 the government submitted a draft National Action Plan on Human Rights
2011-2014 to the parliament. The draft plan, improved compared to its
earlier version, still did not take into account some of the important recommendations
made by civil society and international organisations. The reform of the Centre
for Human Rights (Ombudspersons) was initiated.

While the government
accepted responsibility for the instances of ill-treatment and
torture reported during the post-election events of April 2009,
investigation of the alleged abuses progressed slowly and did not address the
pleas of the vast majority of the victims. The ad-hoc parliamentary commission
of inquiry started work in January 2010, three months after it was set up. Its
conclusions, delayed until July 2010, were not acted upon as required, thus
creating a sense of impunity. In parallel, the government set up a commission
to identify and indemnify the victims and in October 2010 provided compensation
to 14 civilians and four policemen.

Limited progress was achieved in the
eradication of ill-treatment and torture. The police reform concept of November
2010 did not acknowledge the issue. Whereas the Council of Europe recommended
the creation of an independent torture investigation body, only a specialised
unit was set up within the Public Prosecution Service, and no independent investigators
were designated. The obligations laid down by the UN Committee against Torture
to improve the functioning of the National Preventive Mechanism Against Torture
were only partially addressed. As regards forensic evidence of physical abuse,
the requirements of the Istanbul Protocol were still not met.

In 2010 the government started implementing
a National Programme on gender equality and a related medium-term plan
(2010-2012). It also designed a programme addressing the specific problems of
women living in rural and suburban areas. Limited progress was made on the
protection of persons from domestic violence and sexual harassment in
the workplace. Courts issued some 40 protection orders under the recently
adopted Law on Domestic Violence. In February 2010, the government adopted
regulations on shelters for the victims of domestic violence as well as a
number of professional guidelines, including for the police. In practice,
effective protection remained unavailable in most rural areas, owing to the
lack of shelters and appropriate social services.

Steps were also taken to protect children’s
rights, including the re-establishment of the National Council for the
Protection of Children’s Rights; the designation of special judges for juvenile
justice; and the ban on solitary confinement for children in the Republic of Moldova’s
largest penitentiary. In April 2010, an inter-agency commission set up to
address the issues of children left without parental care adopted an Action
Plan, although the implementation of this plan has been undermined by the lack
of resources. The parliament adopted in May 2010 the legal framework for the
adoption of children. The government approved in June 2010 the national action
plan for protecting children without parental care in 2010-2011.

The situation with regard to freedom of
expression and media pluralism improved. A new Law on Freedom of
Expression, largely in line with OSCE recommendations, was adopted in April
2010. Two TV stations with national coverage and several local TV and radio
stations were opened. Observers praised the balanced editorial line of the
national broadcasting company Teleradio Moldova following changes in its
leadership and the strengthening of its Supervisory Council. This improvement,
however, is mostly contingent upon individuals and is not guaranteed by law.
The Audiovisual Code and the Electoral Code were amended to better regulate
media coverage of electoral campaigns. No restrictions on the freedom of media
were reported in the electoral context. Nonetheless, complaints about unfair
treatment by the authorities were made by a nation-wide TV channel, a radio
station and two newspapers linked to a major opposition party.

In June 2010 legal amendments were made to improve
the exercise of the freedom of association, notably by avoiding
re-registration with the authorities of established civil society organisations.
At the same time, there was a fall in the number of violations of the right
to peaceful assembly, although a number of restrictions continued to be reported.
In May 2010, the Chisinau municipality requested the prohibition of the
Moldovan gay pride parade, which led to the latter’s cancellation for the third
year in a row; in June, it withdrew its authorisation of a demonstration
organised by a large opposition party.

No significant progress was made with
regard to minority rights and the fight against discrimination. A
Law on preventing and combating discrimination was not adopted. A number of
groups (including Roma, persons living with HIV/AIDS, and Lesbian, Gay,
Bisexual and Transgender persons) continued to suffer from discrimination. In
May 2010, the Committee of Ministers of the Council of Europe listed a number
of “issues for immediate action” to combat discrimination. In November 2010,
the government started to reflect on a new Action Plan on Roma Discrimination. Persons
with disabilities also continued to face discrimination as well as
pressure towards institutionalisation. However, in July 2010, a national
strategy on their social inclusion, supported by an action plan, was adopted;
as part of that effort, a roadmap was designed to introduce the World Health
Organisation International Classification of Functioning, Disability and
Health, and the related policy and regulatory reform measures.

Freedom of religion showed a slight improvement. Religion became an optional class in
school, and religious activity by foreign citizens in public places was explicitly
allowed. However, the treatment of religious groups not belonging to the mainstream
Orthodox church remained problematic. A number of groups (mainly Muslim)
continued to be denied registration; and although the authorities condemned the
dismantling of the Jewish Chanukah Menorah in Chisinau by an Orthodox community
in December 2009, the desecrated object was not replaced, which contributed to
a sense of impunity.

No new developments can be reported as
regards trade unions’ rights and core labour standards (see under
employment and social policy part).

The execution of judgments of the European
Court of Human Rights improved throughout the reporting period, but not all
measures have yet been taken to address the systemic problems noted in the
Court’s decisions.

During the second half of the year, the
Republic of Moldova ratified the International Convention on the Rights of
Persons with Disabilities. The following remain to be ratified: the Optional
Protocol to the latter convention, the International Conventions for the
Protection of All Persons from Enforced Disappearance and on the Rights of All
Migrant Workers and Members of their Families, and the European Charter of
Regional and Minority Languages. The Republic of Moldova continued to cooperate
actively with the UN human rights mechanisms, and in June 2010 extended an open
invitation to all UN special procedures.

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

The Republic of
Moldova cooperated closely with the EU on regional and international issues,
and aligned itself with 38 of the 44 EU CFSP declarations open for
alignment. In October, the government deposited the ratification documents of
the Rome Statute of the International Criminal Court.

The Republic of
Moldova and Ukraine did not succeed in finding a negotiated solution to their
few remaining disagreements over the demarcation of the northern and southern
segments of their common border. Whereas bilateral contacts on these issues
intensified at the expert level, more attention and effort are needed on this
matter at political level given the importance of border management issues in
the visa dialogues of the two countries with the EU.

Cooperation for the settlement of the
Transnistrian conflict

The Republic of Moldova cooperated with the
EU on all issues related to the Transnistria settlement efforts. It played a
constructive part in the five informal meetings of the so-called “5+2” format,
which yielded long-overdue, though only limited, progress towards the
resumption of formal talks. The Deputy Prime Minister in charge of the
Transnistrian settlement had frequent informal meetings with the Transnistrian
negotiator. The Republic of Moldova and the Transnistrian de-facto authorities
lent their coordinated support to the EU-sponsored confidence-building projects,
and reactivated their bilateral sectoral working groups. As a result, train
passenger traffic to and from Odessa (Ukraine) through the Transnistrian region
resumed.

EU Border Assistance Mission to
Moldova and Ukraine (EUBAM)

The Republic of Moldova continued to be
fully committed to, and participated constructively in the work of the EU
Border Assistance Mission to Moldova and Ukraine (EUBAM). A EUBAM branch office
was opened in Chisinau in February 2010. With EUBAM support, the Moldovan
customs and border guard services continued to enhance their professional
capacities, as well as inter-agency cooperation within the Republic of Moldova
and between the Republic of Moldova and Ukraine. EUBAM supported the
demarcation of the central segment of the Moldovan-Ukrainian State border on
the Ukrainian side.

3.
Economic and Social
Reform

Macroeconomic framework and
functioning of the market economy

The global crisis hit the Moldovan economy
hard. GDP contracted by 6%   in 2009, with investment and remittances
falling by around 30%. The sharp fall in external financing sources exposed a
severe financing gap. On 29 January 2010, the IMF agreed to provide financial
assistance of approximately USD 560 million (EUR 420 million) spread over three
years. This was supplemented by EUR 90 million of EU macro-financial
assistance.

In 2010 the Moldovan economy began to
recover. Real GDP grew by 6.9%. Private consumption and investment started to
rise again, although external demand subtracted again from growth. On a
sectoral basis, the recovery was broad-based, with agriculture, industry and
services all growing.  Exports rebounded strongly but were outpaced by imports,
meaning that the persistently high trade balance expanded by about 2% of GDP.
The increase was offset by a rise in remittances and labour income and the
current account deficit decreased slightly from 8.5 %of GDP in 2009 to 8,3%  of
GDP in 2010. Foreign direct investment inflows are estimated to have risen to
3.5% of GDP from 2.3% % in 2009 (although still less than a third of the level
in 2008). Long term external borrowing increased again together with the
official reserves, although also supported by the multilateral and bilateral
financial assistance. The weakness on the external accounts subsided in 2010
while the IMF programme and the international donor assistance continued
supporting the macro-economic stability and the government's reform agenda.

After decreasing rapidly through 2009,
inflation edged up again through 2010, while credit and domestic demand remained
subdued. In particular, inflation was driven up by increases in food prices and
energy tariffs, the depreciation of the leu, and higher excise rates. The Consumer
Price Index rose to 7.41% in 2010 (period average). In response to mounting
inflationary pressures, the National Bank of Moldova (NBM) reversed the trend
of monetary easing by raising the base lending rate twice in the first quarter
of 2010, up to 7% and further to 8% in January 2011. The National Bank of
Moldova (NBM) adopted a more explicit policy of inflation-targeting, with a
target of 5% ±1,5 percentage point for the end of 2012. The NBM’s policies have
started to be gauged in quarterly Monetary Policy Reports, the first of which
was published in February 2010.

The authorities have focused fiscal and
monetary policy on ensuring macroeconomic stability and fiscal consolidation.
The government reduced the deficit in 2010 to 2.5% of GDP ) from 6.3% in
2009. The reduction was driven by the good performance of revenues linked to
the economic recovery, cuts in general public services and reduced debt
servicing costs, as well as regulatory rises in taxation contributing to a
substantial increase in revenue. The 2010 budget included increases in VAT on
gas, and higher excise duties on tobacco products, luxury cars, alcoholic
beverages and perfumes. Government debt increased somewhat to around 26% of
GDP.

In the context of efforts to put the
economy on a reform path, the government has adopted a wide-ranging medium-term
structural reform programme ('Rethink Moldova'). The programme received the
support of international donors at the Consultative Group meeting of March 2010
organised by the World Bank and by the Commission. In the medium term, the
government aims at further narrowing the budget deficit, mainly through an
adjustment of current expenditure on wages, goods and services, and subsidies.
In line with Action Plan objectives, the government also aims at reforming the
civil service and the judiciary; combating corruption; reducing and streamlining
business administration, providing greater support to small and medium-sized
enterprises, and improving education and health. A total of EUR 1.9 billion (of
which EUR 550 million from the EU) were pledged by international donors in
support of the programme for the period 2010-13.

Employment and social policy

As 30% of the Republic of Moldova’s
population lives in absolute poverty and 4.5% lives in extreme poverty,
the impact of the recession on living standards has been acute. The major
near-term challenge for the Republic of Moldova is to fight poverty and
maintain basic living standards, whilst consolidating public finances.

The economic recovery is not yet reflected
in employment creation. Unemployment continued to rise and was estimated
at 6.5% according to the survey-based ILO methodology at the end of 2010 – while officially registered unemployment is estimated at 3.4% for
the same year. Youth
unemployment (16-24 years old) also rose, to 18.9%.

In January 2010, the funds for active
employment policies (training, mediation, placement in the labour market)
increased, but the resources for passive policies remained much higher. Active
Labour Market Policies are often not offered as comprehensive packages of
employment and training services and do not reach those who are “hard to
place”. In March 2010, the government approved the 2010 National Action Plan on
Employment.

The Republic of Moldova continued
convergence towards EU standards in the area of employment and social policy.
In May 2010, the government approved national legislation in line with the EU directive
on the minimum requirements for safety and health at the workplace, following
the ratification of the International Labour Organisation (ILO) Convention on
occupational safety and health. The Amendment to Article 20, paragraph 1 of the
Convention on the Elimination of All Forms of Discrimination against Women was
ratified in September.

No new
developments can be reported as regards social dialogue.

As regards labour
rights, the Labour Code was amended in July 2010 with changes
aiming at respecting human dignity, preventing discrimination based on gender
and against persons infected with HIV, as well as
at combating sexual harassment at the workplace. A government Decision
of May 2010 transposed into Moldovan national legislation the EU
Directive (89/391/EEC) regarding the minimum requirements for health
and safety at the workplace.

In the area of social protection, the
Republic of Moldova put in place targeted compensation schemes for heating costs
for families receiving social assistance, low wage public sector workers and
pensioners on low incomes. The minimum guaranteed income was increased in
October 2010 by 40% for the first three months of 2011. Although social aid
continued to expand, as of August 2010 it only covers 27% of the poorest 10% of
the population and 7.6% of the second poorest. The Republic of Moldova continued
to extend the new targeted social assistance scheme and, according to the ministry
of labour, Social Protection and Family over two thirds of the eligible
households (a target agreed with the IMF) benefited from at least one social
allowance by the end of 2010

4.
Trade-related issues, market and regulatory
reform

The EU remained the Republic of Moldova’s
most important trade partner. Moldovan exports to the EU increased by 12.8%,
while EU exports to the Republic of Moldova increased by 24.7%. The Republic of
Moldova’s trade balance with the EU remains substantially negative, accounting
for EUR 948 million. The EU Autonomous Trade Preferences (ATPs) granted to the
Republic of Moldova since March 2008 had a positive impact on trade flows, as the
Republic of Moldova used its EU import quotas mainly for
non-animal related products. A proposal from the Commission to extend the current
ATP Regulation, which would also include a significant increase of the wine
quota, will be presented to the Council in May 2011. The negotiation of the
Agreement for protection of Geographical Indications made good progress during
the reporting period. The legal framework was further developed with, inter
alia, the adoption of regulations on the procedure for filing, examination and
registration of Geographical Indications, Appellations of Origin and Traditional Specialties Guaranteed. There
were no developments in relation to the ecological tax on the eco-declaration on
imports of products packed in plastic recipients and in plastic coated
paperboard.

The Commission carried out a fact-finding
mission to the Republic of Moldova in June 2010 and established a detailed assessment
of the Republic of Moldova’s preparedness for a deep and comprehensive free
trade area (DCFTA). It made recommendations on key reforms which the
Republic of Moldova would need to undertake in order to start negotiations
("key recommendations"). To address these recommendations the
Republic of Moldova adopted an Action Plan in October 2010. The plan was
prepared in consultation with the private sector and provides for the creation
of Mixed Working Groups for the DCFTA.

As of January 2010 the Customs
Service of the Republic of Moldova (MDCS) comes under the ministry of finance.
The modernisation of the MDCS in line with the EU standards is continuing via
the implementation of the 2009-2011 Institutional Development Plan and the
Strategy of Professional Training for 2010-2013. In order to strengthen customs
control based on risk management, the MDCS developed a risk management action
plan. It also drafted new regulations on procedures for risk assessment,
analyses, profiling, monitoring and reviewing of the risk management process,
including the reporting system. It furthermore reinforced the central and local
levels by means of additional personnel and training. The MDCS set up a
specialised IPR division at central level. In June 2010, the Republic of Moldova
adopted a law for abolishing customs fees. Since July 2010 the Republic of Moldova
has applied the ATA Carnets System for the facilitation of temporary import
procedures. The MDCS launched the implementation of the “Trustworthy economic
operators” programme which provides for a simplified customs control procedure
for reliable companies. In July 2010, the MDCS approved a regulation which
outlines the criteria and procedures for obtaining the said status. As far as
cooperation with other enforcement agencies at the border is concerned, in
April 2010 the MDCS and the Border Guard started implementing a new on-line
information exchange system to simplify control procedures.

On the free movement
of goods and technical regulations, the Republic of Moldova continued to
make some progress. The government adopted a draft law on accreditation
in August 2010 and submitted it to the parliament. The Republic of Moldova has adopted
over 700 EU standards since late 2009.

In the area of sanitary
and phyto-sanitary (SPS) rules, the Republic of Moldova took further steps
towards gradual approximation with EU rules. This is important, inter alia,
in the context of a future DCFTA. The Republic of Moldova started developing a
food safety strategy. It adopted implementing legislation in areas such as
hygiene rules and prepared other SPS legislation. The European Commission’s
fact-finding mission of June 2010, preparing the DCFTA, showed that the
Republic of Moldova will have to make further progress in the sector. In May
2010 the Republic of Moldova adopted rules on food of animal origin and on
hygiene for food. The Republic of Moldova trained SPS experts, further
strengthened laboratories and continued the identification of animals with a
view to developing traceability. In May 2010, the European Commission’s Food
and Veterinary Office (FVO) carried out a mission to the Republic of Moldova on
residue control in live animals and animal products and the control of
veterinary medicinal products. This mission monitored the implementation of the
action plan established by the Republic of Moldova following a FVO mission in 2008.

The business climate was improved
through the adoption in June 2010 of a law on a ‘one-stop-shop’ for business
registration and in September 2010 of a new law on Internal Trade that clearly
stipulates the authorisation procedures for business activities. The ministry
of economy conducted an inventory of the permissive
acts issued by public central authorities to entrepreneurs, instruments such as
authorizations, permits, certificates, approvals and declarations. The study
concluded that only 270 of the 400 or so acts should be maintained.

There were no significant developments on company law and the bankruptcy law in
2010.

On financial services, while the
banking system is well capitalised, there are a large number of non-performing
loans, amounting to 17% of all bank loans, and a high proportion of foreign
currency denominated loans, around 45%, which heightens exchange rate
vulnerability. Partly as a result of this, as well as due to falling deposits,
banks significantly tightened their lending criteria. The parliament adopted a
Law on Financial Institutions in September 2010. This will also lead to some
modifications in the Law on the National Bank of Moldova (NBM). The Strategy
for Development of the Non-Banking Financial Sector 2010-2013 was adopted in
August 2010. It provides for consolidation of regulatory and surveillance
system; development of securities markets; strengthening of a network for loan
associations; and reduction of risks as well as protection of the rights and
interests of financial market participants. A draft law on capital markets was
presented to the government in September 2010.

There were no new developments in the policy
area of movement of capital and current payments.

Other key issues

The Republic of Moldova continued to
strengthen its tax administration and developed a medium-term strategy
for its reform (State Tax Service Development Plan for 2011-2015), and a tax
compliance strategy for 2011. More efforts are needed in terms of policy
formulation. The Republic of Moldova approved a new regulation on VAT refunds
in October 2010, which assigns the responsibility for examination of requests for
VAT refunds to the heads of local tax units with a view to simplifying the
refunds procedure and increasing transparency.

There was no
progress in the key area of competition policy. Work on the new Law on
Competition is still ongoing.

In the field of
intellectual property rights, the Republic of Moldova adopted a law on
copyrights and related rights in July 2010. The National Commission on
Intellectual Property started work in July and is to take the lead in implementing
and enforcing intellectual property legislation. Enforcement of intellectual
property rights remained an issue of concern. The level of piracy and
counterfeiting remained high. According to a study by an independent expert
organisation, published in May 2010, prevalence of software piracy had risen to
91%. The Republic of Moldova ranks as the third most affected country in the
world. The National Commission on intellectual property started work in July
2010. Following the Republic of Moldova’s request to negotiate an extension
agreement with the European Patent Office (EPO), a feasibility study was
launched. The Customs improved its surveillance of the borders by setting up a
specialised IPR division and by completing its IPR register, doubling its risk
profiles in Asycuda World from 15 to 30.

Approximation of the Moldovan public
procurement legislation continued on the basis of the 2007 law. An
independent Public Procurement Agency was created under the ministry of finance.
Sectoral Legislation Approximation Guidelines for convergence towards EU law
were developed to help complete the work; the main shortcomings concern the
domestic preference for contracts below MDL 2.5 Million (EUR 152,000), the
electronic procedure and the appeals procedure. Practice showed increased
public confidence in the fairness of the procurement system. Over 900
representatives of contracting authorities were trained in the new procurement
systems.

The National Bureau of Statistics continued implementing the
Strategy for National Statistics Development and Action Plan for 2008-2011. It
prepared the upgrade to the Classification of Economic Activities of the
Republic of Moldova according to the Nomenclature of activities within the European
Union - NACE rev.2 and launched the Consumer Price Index calculator on its web
site. In September the government approved the concept for the development of
the Statistical Information System. The dissemination of statistical
information was further improved.

In August 2010 the Republic of Moldova
adopted the Action Plan for the Development of Accounting and Auditing
in the Corporate Sector for 2009-2014. The new National Accounting Standards
will be implemented from January 2014 except for public entities, starting in
2011. The ministry of finance undertook preparation and broad consultation on the
introduction of International Financial Reporting Standards (IFRS) for SMEs as
an optional second level reporting standard, whilst retaining the existing
National Accounting Standards, which were updated in line with recent
developments in IFRS.

During 2010, the ministry of finance
started work on measures to improve the organisational structure of the Audit
Oversight Council and to ensure operation in line with the EU Directive on
Statutory Audit. A Working Group to draft proposals for amendments to the Law on
Auditing was set up in September 2010.

On enterprise policy, the government
continued to implement the Institutional Development Plan (IDP) for 2009-2011
in support of SMEs. It also adopted a national strategy for consumer
protection, which provides for the cooperation of governmental bodies with
civic associations and for some public financial support. The Republic of Moldova
improved the compliance evaluation process, reinforced consumer protection,
made market supervision more efficient, facilitated domestic trade, eliminated
certain administrative constraints and reduced operational costs for
authorising trade activities. A new retail price formation mechanism for
medicines was also developed.

With regard to
the management of public finances, the ministry of finance proposed
additional amendments to the 2009 law on budget systems and processes in the
context of the 2010 Budget Law. Work on budget preparation and implementation
methodologies progressed satisfactorily, but the new law on public sector financial
management and accountability remains suspended and further reforms are being
introduced through other legislation. Weak implementation capacity within the
Treasury, including staffing and management, may be hindering progress on
developing further budget implementation methodologies.

In July 2010,
the government approved the public internal financial control
development programme, setting out its strategy and action plan for
implementation. In September 2010, the parliament approved a new law on public
internal financial control and this will enter into force in November 2011. The
Central Harmonisation Unit within the ministry of finance continued developing
methodological norms for improved financial management and control.
Considerable awareness-raising and training effort will still be required in
order to explain and implement the new approach to public internal financial
control

The Court of
Accounts adopted Financial Audit and Performance Audit manuals for external
audit in line with the International Organisation of Supreme Audit
Institutions (INTOSAI) standards and prepared a Development Strategy for
2011-15.

5.
cooperation on justice, freedom and security

In the field of
mobility, in June 2010 the EU and the Republic of Moldova established a
visa dialogue examining the conditions for visa-free travel of Moldovan
citizens to the EU as a long-term goal. The EU prepared an Action Plan on visa
liberalisation and forwarded it to the Republic of Moldova in January 2011. The Action Plan contains two sets of benchmarks and identifies all the measures to be adopted and implemented as well as clear requirements to be achieved.

The implementation of the Visa Facilitation
and Readmission Agreements with the Republic of Moldova has continued. The
European Commission adopted in October 2010 draft negotiating directives for
the renegotiation of the Visa Facilitation Agreement in order to align it
with the new Visa Code and to introduce further facilitations. The negotiating
directives were approved by the Council in April 2011.

Regarding the mobility partnership,
new initiatives were included, covering areas such as strengthening
organisational and institutional capacity of the Republic of Moldova to
regulate legal migration flows, promotion of sustainable use of remittances and
their attraction into the local economy, supporting the implementation of the
EU-Republic of Moldova visa facilitation and readmission agreements, protection
of victims of trafficking, analysing the effects of migration on families left
behind, as well as protection of refugees and asylum seekers. The
implementation of most of these projects will start in 2011.

As far as the asylum
system is concerned, the Republic of Moldova continues to be covered by a
Regional Protection Programme (RPP) for Eastern Europe (encompassing also
Belarus and Ukraine). Phase II of this RPP will start being implemented in
2011. So far the Programme has been successful. The asylum legislation has been
aligned with EU standards. However, needs to ensure that the rights of recognised
refugees are enforced (i.e. regarding the issuance of travel documents).

In July 2010, the
Republic of Moldova adopted the Law on Foreigners, which regulates the entry,
stay and exit of foreigners. The law includes provisions for a ‘one stop shop’
for foreigners to obtain residency permits.

In the area of border
management, the Republic of Moldova established a National Council on
Border Management in September and adopted its Integrated Border Management
strategy in November 2010. In addition, it cooperated closely with EUBAM,
FRONTEX and other partners in the TYRA joint border control operation. This
intelligence-led action enabled Moldovan and Ukrainian agencies to identify
illegal migration and contraband channels and to develop a corresponding modus
operandi.

Concerning the
fight against organised crime, the ministry of the interior established
an inter-agency Working Group in July 2010 to draft a law and a corresponding
Strategy for the period 2010-15.

The Additional
Protocol to the Council of Europe Convention on Cybercrime concerning the
criminalization of acts of a racist or xenophobic nature committed through
computer systems, which the Republic of Moldova signed in 2003, remained
un-ratified.

With regard to the fight against trafficking
in human beings, an amendment to the 2005 law in
June 2010 specified the state authorities and agencies involved in addressing
the issue. In August, the National Committee for Combating Trafficking in Human
Beings adopted its second National Action Plan for 2010-11 establishing state
policy on coordination; prevention; victim assistance and witness protection;
criminal investigation and prosecution. The number of victims still remains
high, and much greater efforts are required in order to tackle organised
trafficking networks and related corruption activities. The National Referral
System for the protection of victims under the ministry of labour, social protection
and the family needs to be enhanced. Considerable capacity-building of all
relevant stakeholders including law-enforcement agencies is still needed. Further
vigorous action to prevent and combat violence against women is also necessary.
Measures to improve reintegration of and assistance to victims should be
stepped up. Strengthening cooperation with civil society in these efforts is
fundamental.

An
inter-ministerial Agreement with the Russian Federation on combating
trafficking is being discussed with view to signature in 2011.

Concerning the
fight against drugs, in December the government approved a National
Strategy on Combating Drug Trafficking and Addiction for 2010-2017 as well as a
first Action Plan. The Strategy is evidence-based and predicated on targeting
both drug demand and supply as well as harm reduction, in line with EU practice.
In September, the Anti-Drugs Department of the ministry of the interior
participated in the “Narcostop 2010” operation organized by GUAM countries
(Georgia, Ukraine, Azerbaijan and the Republic of Moldova) focusing on
operational coordination of law enforcement agencies along regional transport
corridors. However, drug trafficking and its links with organised crime
remains an issue of serious concern which requires intensified inter-agency law
enforcement cooperation both nationally and regionally. The development of an
integrated approach on drug demand and supply reduction needs investment,
particularly in capacity building, training and operational coordination. In
October 2010, the Republic of Moldova participated in the ENP regional seminar
on the EU drug monitoring system organised by EMCDDA (European Monitoring
Centre for Drugs and Drug Addiction) and the Commission in Brussels.

With regard to
the fight against money laundering, the Centre for Combating Economic
Crime and Corruption elaborated a draft National Action Plan
against money laundering and the financing of terrorism in February 2010. The
Moldovan Financial Intelligence Unit participated in the Egmont Group meeting
in October 2010 leading to negotiations on information exchange agreements with
Portugal, France, Malta and Azerbaijan. The Republic of Moldova continued to implement
the national control regime based upon the 40 plus 9 Special Recommendations of
the Financial Action Task Force (FATF) and in line with Council of Europe
Moneyval recommendations. Due diligence, ‘Know Your Customer’ (KYC) and ‘Know Your
Business’ (KYB) practices continued to be implemented within financial
institutions and reporting agencies, in line with statutory obligations.

In the area of data
protection, the Republic of Moldova signed the Additional Protocol to the
1981 CoE Convention for the Protection of Individual with regard to the
Automatic Processing of Personal Data regarding supervisory authorities and
trans-border data flows in April 2010.

Regarding police
and judicial cooperation, the Republic of Moldova actively participated in
the information exchange activities of the SECI centre (Southeast European
Cooperation Initiative) and with other GUAM countries. In July 2010 the ministry
of interior agreed an Action Plan with the General Inspectorate of the Romanian
Gendarmerie. The government approved the concept for the reform of the ministry
of interior and its subordinated and deconcentrated structures in December
2010. The Republic of Moldova has not yet signed the Second Additional Protocol
to the European Convention on Mutual Assistance in Criminal Matters.

With regard to judicial cooperation in
civil matters, no progress can be registered regarding
the accession of the Republic of Moldova to some important Hague Conventions e.
g. 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). The implementation of the 1980 Hague Convention on International
Child Abduction is also a matter of interest for the Commission.

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

In January 2010 the government started
allocating 50% of the fuel excise tax revenues to a road fund. This boosted the
implementation of the land transport infrastructure policy. The
procurement of works for investments financed by various donors made significant
progress. As regards the United Nation Economic
Commission for Europe (UNECE) - AETR agreement on driving times and rest periods,
the ministry of transport developed a security policy for
the use of digital tachographs that has been approved by the European
Certification Authority (ERCA). As from 1 January 2011, drivers of vehicles
equipped with digital tachographs will be fined when conducting international
transportations, if they do not have the personal driver card. Furthermore, the
Republic of Moldova approved a National
Road Safety action plan.

The Republic of Moldova cooperated closely with
the European Aviation Safety Agency and plans to achieve a higher level of integration with the EU
through the negotiation of a comprehensive aviation agreement aimed at creating
a Common Aviation Area.

As regards inland waterways, there is a
need to ensure that the Republic of Moldova's inland
waterway fleet will meet UNECE requirements. In the maritime sector, the
Republic of Moldova's main port, in Giurgiulesti on the Danube River,
substantially increased the turnover of goods. Construction work to extend the
port for container handling is ongoing. Maritime
safety remains an issue of great concern. The Moldovan fleet still figures in
the ‘High Risk’ category of the black list of the Paris Memorandum of
Understanding on port state control.

In May 2010 following the entry into force
of the new electricity and gas laws (in February 2010), the Republic of Moldova
became a member of the Energy Community. The Republic of Moldova
initiated an update of its energy strategy. The situation in the energy sector
remained difficult due to the heavy dependence on (Russian) imports, major
inefficiencies and historical debts. In March 2010, the Republic of Moldova
adopted a plan to implement the EU acquis in accordance with its obligations
under the Energy Community Treaty. In May, the regulator adopted rules to
enhance transparency in its decision making. The Republic of Moldova continued
to assess ways to address historical gas supply debts including gas supplies to
Transnistria. The Republic of Moldova started addressing losses and arrears in
the heating sector. Since January, the Republic of Moldova has transferred the
responsibility for setting heat tariffs from the municipalities to the energy
regulator. In January and May, the Republic of Moldova adjusted heat,
electricity and gas tariffs.

The Republic of Moldova pursued
preparations to assess the possibility to join, together with Ukraine, the
interconnected electricity networks of continental Europe. It continued the
construction of the electricity interconnection Gotesti-Falciu (Romania) and
further studied the Balti-Suceava (Romania) electricity interconnection. The
Republic of Moldova rehabilitated electricity and gas networks and further
reduced network losses. It drafted an inventory for the maintenance of gas
pipelines. The Republic of Moldova continued to implement its programme to gasify
the country and assessed the possibilities for underground gas storage. The
Republic of Moldova and Romania studied the
construction of the reversible Ungheni-Iasi
gas pipeline.

In July 2010 the Republic of Moldova
adopted an energy efficiency law, which provides, inter alia, for the
establishment of an energy efficiency agency. The Republic of Moldova took
steps towards an energy efficiency programme, the updating of the law on renewable
energy, as well as action plans on renewable energy and biofuels. The Republic
of Moldova needs to step up its efforts to update and implement its energy
strategy in this area.

In the field of climate change, the
Republic of Moldova completed a first draft National Low Emission Development
Strategy and a draft National Climate Change Adaptation Strategy. The
Republic of Moldova continued to prepare projects under the Clean Development
Mechanism (CDM), even if no new projects were registered at the UN level,
leaving the overall number of registered projects at four. The European Commission continued to support the
Republic of Moldova in the implementation of the Kyoto Protocol. The Republic
of Moldova is encouraged to fully implement the Cancun
agreement and in particular devise a low carbon development strategy including
update information on target or actions that it will implement

Regarding the environment,
the legislative framework for environmental policy continues to require further
development, and implementation of legislation remains a challenge. There was little
development in the preparation of a new environment framework law, a law on
environmental impact assessment and a new water law, as well as legislative
amendments on nature protection. The Republic of Moldova
made progress in developing river basin management plans with neighbouring
countries. It also took some steps to promote the integration of environmental
considerations into other policy sectors, such
as energy. The ministry of environment obtained
additional staff, although further strengthening of administrative capacity at
all levels remains a major challenge. Coordination between authorities
continues to require attention.

Procedures and
consultation with the public in the context of environmental assessments
continue to require particular attention. The Republic of Moldova
finalised a plan for implementing the Aarhus Convention. The Moldova Regional
Environmental Centre continued to play an important role in enhancing
stakeholder participation and networking in the area of the environment. The
Republic of Moldova made no significant progress in the ratification of
remaining relevant UNECE protocols. Furthermore, particular attention is needed
with regard to the implementation of several agreements which are already
ratified.

The Republic of
Moldova participated in the EU Water Initiative, including a national policy
dialogue, as well as in the International Commission for the Protection of the
Danube River. Cooperation and information exchange took place between the
Commission and the Republic of Moldova, including on the 2001 national concept
of environment policy, water, forestry, waste management, management of
environmental information, nature protection and air quality.

In the field of civil protection, an
administrative arrangement to reinforce cooperation between the
authorities of the Republic of Moldova and the EU Civil Protection
Mechanism is under preparation. There are
also activities under the EaP framework (please see the sectoral report).

In the information society sector,
the National Regulatory Agency for Electronic Communications and Information
Technology started the market analysis process, identified six relevant markets
and designated the incumbent operator as having
significant market power in two of them (wholesale access
to network infrastructure at a fixed location and wholesale broadband access).
This is expected to lead to obligations imposed on these operators that will
open the fixed telecommunications markets to competition. Other important
measures concern the management of the National Numbering Plan and the National
Table for Frequencies Allocation, the alignment to the EU decision on
harmonised numbers for services of social value and the elaboration of the
methodology to be used for drafting the cost calculation models for
interconnection and access services.

Some positive initiatives are reported in the field of e-government,
including the establishment of an e-government centre in August 2010. To
improve accessibility in rural areas, the International Telecommunication Union
(ITU) will implement a pilot project on the connection of education
institutions to broadband Internet in rural areas of the
Republic of Moldova. The Republic of Moldova has made progress to improve high
speed connectivity with research and education networks. This included the
inauguration of the fibre link between the Republic of Moldova and the GEANT
network node in Romania, which took place in May 2010. Via this link, the
Moldovan research and education community has full access to its European and global
partners.

Regarding the audiovisual sector, there is a need to ensure that all enacted
legislation in the field of media complies with European standards on media
regulation, in particular the laws on state
secrets and on transparency in the public decision-making process which entered
into force in 2009. There is also a need to ensure the further
approximation of audiovisual legislation and standards to those of the EU, in
particular with regard to the ‘Audiovisual media services directive’.

Investment in Research and Innovation remains
at relatively modest levels. During 2010, the Academy of Science continued to
be very active in preparing the Moldovan research community for association to
the 7th Framework Programme (FP7), by implementing a comprehensive action plan to increase
research capacity. Although the numbers of applications from Moldovan research
organisations to FP7 increased slightly in 2010, the overall number of
applications still remains relatively low.

The Republic of Moldova continued to
participate actively in the International Science and Technology Cooperation
Network for Eastern European and Central Asian countries (FP7 IncoNet EECA
project), which aims to support a bi-regional EU-EECA policy dialogue and to
increase EECA participation in FP7. The Republic of Moldova is a target
country under the new FP7 International Cooperation Network for Central Asia
and South Caucasus countries (FP7 IncoNet CA/SC) which was launched in April
2010 and aims to strengthen and deepen the EU S&T cooperation with the
CA/SC countries.

The Republic of Moldova is also taking an
active part in the Black Sea ERA-NET project, the aim of which is to contribute
to the coordination of national research programmes (from EU member states and
partner countries) targeting the extended Black Sea region. The project
consortium for the Black Sea ERA-NET project recently launched a first joint
call for research proposals to develop innovative solutions for sustainable
development in the region.

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

The ministry of
education drafted a new Education Code which was submitted to public
consultation in April and presented to parliament in June, but not yet adopted.
It includes important provisions on decentralization to the regions, lifelong
learning, quality assurance and the involvement of social partners in
education. Most higher education institutions have achieved Bologna Process
objectives, such as the implementation of a two-cycle system; the quality
assurance measures; the European
Credit Transfer and Accumulation System (ECTS); and the recognition of
diplomas. However, further work is required on the development of a national
qualifications framework that is compatible with the European Qualifications
Framework (EQF) and on the organization of third cycle for doctoral studies.

In the field of vocational education and
training (VET), reforms continued to orient training provision towards
labour market demands in line with the 2007 National Strategy. The Consultative
Council finalised a first draft of a comprehensive National Qualifications
Framework with the technical support of the European Training Foundation. The
first national report under the Torino Process, spearheaded by the Republican
Centre for VET Development, identified the following as future priorities: a
clear role for social partners in training provision, learning opportunities
for adults and young people outside formal education, and effective financing.
As in 2009, EU assistance focused on improving training content in the context
of the EU-Republic of Moldova Mobility Partnership with results achieved in the
definition of occupational standards and development of a competence-based
approach in education and training. Continuing work on social dialogue in education
and training is needed in order to enable training provision and policy to
better meet the demands of employers and the labour market.

Higher
education reform continued to benefit from participation in Tempus, with
5 projects selected under the third Call for Proposals for Tempus IV, including
support for the creation of doctoral studies in line with policy commitments
under the Bologna Process. The programme continues to facilitate implementation
of Bologna reforms with all 17 public universities taking part.

Six Moldovan students were awarded
scholarships for Erasmus Mundus Masters Courses under Action 1. In 2010,
Moldova State University became the first Moldovan university to be selected as
a full partner in an Erasmus Mundus Action 1 project, delivering a masters
course on migration with EU partner universities. Student and academic mobility
was further enhanced under Action 2 with the expected award of 66 grants. The
Academy of Economic Studies received a Jean Monnet project to increase
the understanding of the Eastern Partnership by public servants, students and
academics.

Moldovan youth
organisations and young people continued to benefit from participation in the
Youth in Action Programme, with a particular increase being noted in the number
of young people from the EU who are participating in voluntary service actions
in the Republic of Moldova. In the area of culture, three Moldovan
cultural organizations participated in the 2010 ENP Special Action under the
Culture Programme. The ministry of culture began preparing four legislative
proposals on the protection of cultural heritage; the first of these – on archaeological
sites - was adopted in September.

The government
continued to implement its National Strategy for the development of civil society
2008-2011. In this respect, the 2008 law on transparency in public
decision-making was amended in September, while the strategic partnership
between public authorities and civil society developed further through the
facilitation of public dialogue, via the National Participation Council and
access to a specific website.

The Republic of Moldova continued to reform
the health sector. The challenges include disparities in health services
related to, inter alia, place of residence or wealth. In July 2010, it
adopted a primary health care strategy for the period 2010-2013. The Republic
of Moldova continued to renovate and build hospitals, and it adopted a hospital
development programme in May 2010. It also worked towards a health information
system that will be aligned with EU and international practice. In May 2010, the
Republic of Moldova adopted measures enhancing state supervision in public
health. It also established a Transplantation Agency and started preparations
to adapt the law on organs, tissues and cells to EU rules. The Republic of Moldova
continued to participate in the Commission’s HIV/AIDS think tank. It adopted
programmes on the prevention and control of HIV/AIDS and Sexually Transmitted
Infections, and on the control of tuberculosis for the period 2011-2015.

8.
Financial cooperation – 2010 key facts and
figures

Cooperation framework

The Mid-Term Review of the programming
document confirmed that the Country Strategy Paper adopted in 2007 remains a
valid framework for cooperation with the Republic of Moldova. The new National
Indicative Programme (NIP) 2011-2013 for the Republic of Moldova was adopted in
May 2010 and has a budget of EUR 273.1 million. The programme is geared towards
supporting the achievement of key policy objectives as outlined in the EU-Republic
of Moldova Action Plan, and pursues three priorities: (1) good governance, rule of law and fundamental freedoms; (2) social
and human development; and (3) trade and sustainable development.

The NIP 2011-13 includes a specific appropriation
to finance new actions under the Eastern Partnership, notably a Comprehensive
Institution Building programme (CIB) (a minimum of EUR 41.2 million) and Cohesion
Policy (a minimum of EUR 6.9 million). The CIB Framework Document was signed in
November 2010 and identified the following key institutions / institutional
clusters for capacity-building support: public administration reform; reform of
the justice system and law enforcement institutions; and preparations for a
future Deep and Comprehensive Free Trade Area (DCFTA) with the EU.

Implementation

The implementation of measures covered by the
Annual Action Programmes (AAP) for 2007, 2008 and 2009 continued. The Sector
Budget Support Programme (SBS) in the area of social protection was further
implemented; it helped the government cushion the effects of the increase in energy
tariffs on the vulnerable layers of the population. The SBS programme in the
area of healthcare system reform rewarded the progress made in areas such as: (1)
management stewardship of the healthcare system, (2) funding of the healthcare
system and mechanisms of payment for healthcare services, (3) the delivery of
healthcare services and (4) resource management. The 2009 SBS programme in the
area of water and water sanitation experienced some delay due to the Republic
of Moldova’s only partial compliance with the conditions set for disbursement.
Besides, EU assistance continued to be implemented through other aid modalities
such as TAIEX, twinning, SIGMA and Technical Assistance. In particular, a High
Level Advisory Group of 10 experts was recruited at the request of the government
to provide strategic advice in a number of areas. The EU continued to support
reform efforts and committed assistance for a total amount of EUR 66 million under the bilateral appropriation
of the European Neighbourhood and Partnership Instrument (ENPI). The AAP 2010
comprises a Sector Policy Support Programme on economic stimulation of rural areas
(EUR 45 million), an energy and biomass project (EUR 14 million) and Technical
Assistance & Twinning in support of the implementation of the EU-Republic
of Moldova ENP Action Plan (EUR 7 million).

In addition to the bilateral allocation, the
Republic of Moldova also benefited from cooperation activities financed under
the ENPI cross-border, inter-regional and regional programmes. The Republic of Moldova
participated in the ENPI Cross-Border Cooperation (CBC) programme Romania/Ukraine/Republic
of Moldova (EUR 126.7 million for the whole programme in 2007-2013). Priorities
are competitiveness of the border economy, environment, emergencies and
interaction between people and communities living in the border areas. The
Republic of Moldova also participated in the ENPI CBC Black Sea Basin programme
(EUR 21.3 million for the programme in the period 2007-2013 with a
perspective of an additional increase in its budget). The main priorities of
this programme are to support cross-border partnerships for economic and social
development based on combined resources, to share
resources and competencies for environmental protection and conservation, and to
support cultural and educational initiatives for the establishment of a common
cultural environment in the Basin. The Republic of Moldova
also participated in South-East Europe Transnational Cooperation Programme to
which the country was admitted in May 2008 with the prospect of being able to
access ENPI Funds for this co-operation. Since March 2011 ENPI funds are
integrated in the South-East Europe programme and are managed by the authorities
of the programme as for ERDF. On the other hand, due to its geographical
location in the Danube Basin, the Republic of Moldova is part of the Danube
macro-region and therefore plays an important role in achieving objectives of
the future EU Strategy for the Danube Region as a whole.

Under the ENPI-financed
Neighbourhood Investment Facility (NIF), one project was approved for the
Republic of Moldova in 2010: the Water Utilities Development Programme (NIF
grant contribution: EUR 10 million, total project cost: EUR 31.5 million).

Other EU instruments supplement the ENPI
assistance package. The Republic of Moldova benefited from cooperation
activities financed under horizontal instruments such as the European
Instrument for Democracy and Human Rights (EIDHR) and the Development
Co-operation Instrument (DCI) thematic programmes: Non-State Actors and Local
Authorities in Development (NSA-LA), Investing in People, Migration and Asylum,
and Environment and sustainable management of natural resources including
energy. The EU adopted a EUR 90 million package, tied to public finance reforms
and improvements in financial stability in 2010, under the Instrument for
Macro-Financial Assistance.

In 2010 the European Investment Bank signed
lending operations to the Republic of Moldova for an amount of EUR 150 million
of which: (1) EUR 75 million to upgrade the quality of Moldovan wine production
and (2) EUR 75 million to support the rehabilitation and upgrade of priority
roads.

Donor coordination

In 2010, the EU Delegation in the Republic
of Moldova played an important role in the coordination of assistance
activities in particular among EU member states. Most donors signed the “Partnership
principles” with a view to enhancing donor coordination in the future.

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