U.S. policymakers, and international financial institutions (IFIs), including the White House, the State Department, the Justice Department, and the IMF, need to take a fresh look at Moldova, a small but vital country in Eastern Europe. Moldova’s security is deteriorating due to Russia’s truculence, yet internal systemic corruption may be a bigger threat. 

The impoverished European country in Europe’s troublesome southeast, located between Romania and Ukraine, is the poorest country in Europe. 

ADVERTISEMENT

Moldova’s corrupt politics are a foil for the expanding Russian influence. It ranked 103 out of 168 in the 2015 Transparency International corruption index

Not only Moscow is trying to keep its former republic in its orbit and away from the EU membership, to which it aspires, it may be eyeing it to project power against NATO member Romania, which hosts an important missile defense base as of May, and against the Balkans.

With presidential elections in October, many Moldovans have voted for Western-leaning parties since the mid-2000s, including Moldovan reform communists then-led by President Vladimir Voronin.

Here the plot thickens. Voronin’s son, Oleg, is a principal business partner is Vladimir Plahotniuc, the only Moldovan oligarch.  Together, their empire building includes alleged corruption, corporate raiding, and opaque and illegal operations.

Plahotniuc is the most powerful person in Moldova and is a high-ranking member of the Democratic Party (PDM). His net worth may be close to two billion dollars. Plahotniuc currently holds no official government position but he is running for president in the fall.

This political kingmaker has captured the Moldovan state. To build his empire, he and his cronies privatized banks, hotels, TV channels, even the parliamentary cafeteria. A billion dollars was allegedly defrauded from a major Moldovan Bank Economii with his – and other politicians’ - participation. 

http://www.vedomosti.md/news/kto-sleduyushij-vsled-za-filatom-i-shorom-v-zhertvu-mogut-pr

His critics say, Plahotniuc “privatized” the Democratic Party, the Parliament coalition, the courts, the Anti-Corruption Commission, Commission for National Integrity, Prosecutor General’s office, and the police. State capture is complete.

There are also media reports of Plahotniuc having a second legal identity in Romania, and possibly another identity in Russia. Questions arise about which way Plahotniuc is looking:  to the West -- or is he really looking to Moscow?

The Moldovan oligarch has managed to convince both Russian President Vladimir Putin and the U.S. State Department that he is their man. There is no doubt that Plahotniuc has strong Russian connections. He is reportedly tied to the Kremlin political honcho Vladislav Surkov, as well as Vice Premier Dmitry Rogozin, in charge of the military-industrial complex and a strong supporter of Transnistria.

http://www.eurasianet.org/node/78636

Some Americans believe in Plahotniuc’s pro-Western views. The Moldovan oligarch recently visited Washington as a part of a Moldovan delegation and met with Victoria Nuland, Assistant Secretary of State for Europe. 

http://www.nytimes.com/2016/06/04/world/europe/moldova-vlad-plahotniuc.html?_r=0

Yet, Moldovans reacted in disbelief that America would embrace this controversial figure.

With his shrewdness, Plahotniuc has created both a “kompromat” state based on blackmail, and a police state, a deadly combination for democratic politics and market economics. In this toxic environment, a win in October by Plahotniuc, or his associate, spells trouble for U.S. and EU interests.

Here’s why. First, politicians with alleged criminal background in position of power may cause the IMF not to provide the next financing tranche to Moldova. The IMF has provided massive credits to Moldova, only to see bank funds mysteriously disappear. At this point, the IMF should not provide the next tranche until transparency is improved and anti-corruption measures are taken.

Second, criminal lawsuits may be launched against Plahotniuc in Romania and in other jurisdictions. An unsealed U.S. grand jury suddenly hit Dmytro Firtash, an oligarch ally of deposed Ukrainian president Victor Yanukovich, leading to his was arrested in Austria in 2014. A surprise case against Plahotniuc could throw Chisinau into a political crisis that Moscow would seek to capitalize upon.

The biggest threat is Russia. With growing tensions between US/NATO, and Russia, Moldova is strategic real estate. Russia is interested in toppling pro-western forces in Moldova in the fall, and thereafter possibly deploying military assets via Transnistria to respond to anti-missile AEGIS systems in Romania, and to NATO units rotating in and out of Bulgaria.

The U.S. (and Europe) should support clean presidential and parliamentary elections. That means, no odious politicians, such as Plahotniuc, to be viable candidates for top public offices. Igor Dodon, the head of the Socialist Party of Moldova is the Moscow-supported, pro-Russian candidate. He has the lead in early polls.  Moldova can do better. 

New candidates, who do not have a trail of criminal accusations and misdeeds following them, should contest the elections. Maia Sandu, the Harvard-educated former Minister of Education has over 60 percent in the March 2016 IRI opinion poll.

The West has to be careful in selecting strategic “bedfellows” in a country where frozen conflicts are capable of exploding sky high and exacerbating conflicts with Russia, leading to military confrontation.

When sleeping with dogs, one may get fleas. We can do better than that.


Dr. Theodore Karasik is Adjunct Senior Fellow at the Lexington Institute and a national security expert, specializing in Europe and the Middle East. He worked for the RAND Corporation and publishes widely in the U.S. and international media.