Foreign investors flee Moldova over lack of democracy, constitutional protection

Moldova's parliament (shown) acts against the "principles of a constitutionally democratic state" say leading foreign investors

CHISINAU (Tiraspol Times) - Just as Transdniestria is categorically refusing to let itself come under Moldovan rule, foreign investors are now also thinking twice about investing in Europe's poorest country. And many of those who have already done so are now planning to leave.

On Monday, Moldova's Foreign Investors Association (FIA) announced that newly approved parliamentary amendments to the Competition Law "run against the principles of a constitutionally democratic state and a market economy based on free competition."

Moldova is run by an ineffective and corrupt Communist government, led by former Soviet-era General Vladimir Voronin. During the Voronin clan's grip on Moldova, the President's son, Oleg Voronin, has repeatedly been identified as the single richest man in the country.

According to the Foreign Investors Association, the new restrictions to Moldova's Competition Law "will undoubtedly deteriorate the investment climate in the country."

Presumption of guilt

Whereas other European countries subscribe to the tenet that someone is innocent until proven guilty, Moldova's Communist-led state has turned the principle on its head and now assume that a company is guilty of breaking the law until it proves its own innocence.

Under the latest changes to the law, Moldova's National Agency for Competition Protection (NACP) will have near-unlimited power to apply random penalties to companies, and this is not a good idea in a country which has been classified as a "failed state" for two years in a row and which is known to human rights organizations as one of the most corrupt in Europe.

In a public statement of protest, the foreign investors told the press that Moldova's adopted amendments "infringe upon basic principles" and that "they deprive businesses of the presumption of innocence, thereby giving NACP an unlimited authority and the right to set up huge fines and penalties. At the same time, the draft amendments provide a vague definition to what should be considered a market, which is non-compliance with the international practice on one hand, while granting the NCAP the right to adopt its own the methodology for determining company "dominant" position on the other,” said the Association's statement.

Industrial production down in Moldova, up in Transdniestria

Foreign investors in Moldova are tired of what they call "corrupt and arbitrary behavior", and expect that the latest round of changes to the law will merely make the situation even worse.

" - A significant number of Law provisions leave room for interpretation, thereby jeopardizing the transparency before civil society, while also supporting corrupt and arbitrary behavior by the NACP officials with regards to business entities and related associations," the foreign investors say.

Trapped in a climate of fear and economic insecurity, industrial output in Moldova continues decreasing. According to Moldova's National Bureau For Statistics, whose covers all of Moldova and not Transdniestria (officially Pridnestrovie), production from January to November 2007 is significantly lower than the same period in 2006.

The opposite is true in Transdniestria, where trade figures published by the local PMR government authorities last week show a 12% increase. Although suffering from its current status as an unrecognized state, the investment climate is better protected in Transdniestria, which local analysts say has a higher sense of rule of law and benefits from stronger government institutions.

See also:
» Misery index in Moldova hits all-time high; "Don't force us to be part of their mess" says PMR
» Watchdog: Moldova one of the most corrupt countries in the world
» Moldova falling apart as corruption, poverty force half the country to leave
» Voronin clan named country's richest, but heir will "never return to Moldova"

Opinion and commentary:
» Institutionalized kleptocracy