In Europe, only Moldova gets debt relief

Moldova is a country of stark contrasts: In this photo, a typical Moldovan village is shown from inside a Mercedes Benz

WASHINGTON, D.C. (Tiraspol Times) - For the first time including Moldova in its list, the The United States House of Representatives has approved by a vote of 285 to 132 a measure supporting forgiveness of debt owed by a number of the world's most destitute countries. A similar measure is working its way through committees in the U.S. Senate, state-run Voice of America reported.

Moldova, which is specifically singled out by name in the U.S. bill, is the only European country poor enough to qualify for the new debt relief package. The others include African nations such as Cape Verde, Kenya, Lesotho and the poor Asian-Pacific states of Samoa, Vanuatu and Vietnam.

The measure would begin a process that could lead to total debt elimination for Moldova. Under the House measure, Moldova and eight other nations owing billions of dollars to the World Bank, IMF, and other institutions, would be eligible immediately for relief.

Under a string of increasingly criticized leaders, Moldova has borrowed billions abroad for phantom projects which have failed to make an impact within the country. Since Moldova declared independence in 1991, the country has increasingly squandered its past status as a large scale agricultural powerhouse and is now unable to feed itself except through aid handouts and food imports.

An estimated one-third of its citizens have been forced to leave the country to find work abroad. Other widely reported sources of income include human trafficking and the illegal trade in live organs.

Heavily indebted poor country

With Moldova's debt being forgiven, the International Monetary Fund (IMF) recognizes that Moldova now has the status of a so-called Heavily Indebted Poor Country. This puts the state on par with the poorest countries in the world, the majority of which are located in Africa.

Before Moldova, no other European country has ever been in the ranking of Heavily Indebted Poor Countries. The debt relief measure will not include Transdniestria (official name: Pridnestrovie) which as a de facto independent country has a different currency, separate government and an economy which in almost no ways overlap which Moldova's. Transdniestria owes an estimated $1.5B to Russia for past energy supplies. A proposed friendship and co-operation treaty between Moldova and Transdniestria specifies that the two sides "independently bear their own obligations on foreign and domestic public debt."

The U.S. House measure was supported by organizations critical of international lending practices, while opponents assert it would end up benefiting corrupt leaders.

Moldova is a desperately poor country led by authoritarian ex-Soviet general Vladimir Voronin who also doubles as the boss of the local Communist party. His son, Oleg Voronin, has quickly risen to become the richest man in the country.

Moldova is classified as a Failed State by the Washington's prestigious Foreign Policy magazine. Its editor, Moises Naim, describes the failed state as "an empty shell in which institutions no longer function at all or have been commandeered in the service of private, often illicit, interests." (With information from VOA)

See also:
» Failed state index ranks Moldova as worst in Europe
» Moldova looks to EU for free cash handouts
» New book lists Moldova as world's unhappiest country