Scandal-weary Moldovans may back pro-Russia candidate for president

By Matthias Williams

CHISINAU (Reuters) - The frontrunner in Moldova's presidential race wants to end his country's seven-year flirtation with the European Union and pivot back to Russia amid deep public discontent with a pro-Western ruling elite that has presided over economic turmoil.

The ex-Soviet republic is still reeling from a banking scandal last year involving the looting of one billion dollars - the equivalent of an eighth of Moldova's economic output - that highlighted the scale of corruption in Europe's poorest nation, where the average monthly family income is below $300.

A victory for Igor Dodon, the opposition Socialist party candidate, in the Oct. 30 election, would be good news for Russia as it vies with the West for influence across eastern Europe, including in Moldova's much bigger neighbor Ukraine.

Dodon's Socialists want to scrap a 2014 blueprint for closer trade and political ties with the EU and instead sign up to the Russian-dominated Eurasian Customs Union. They also favor more autonomy for Moldova's breakaway Transdniestria region, whose mainly ethnic Russian population wants to join Russia.

Moldova's ruling Democratic party, by contrast, sees the EU pact, known as an Association Agreement, as a stepping stone towards applying for full membership of the bloc by 2020.

The Socialists have said they will organize street protests if the government-backed candidate, Marian Lupu, wins, threatening more instability in a country that has had five prime ministers in the past three years.

"These elections are taking place against the background of very low trust in the current government and in the pro-European integration path," Dodon, a 41-year-old former economy minister, told Reuters in an interview.

"In most cases the support of the EU was geopolitical support. And the West was turning a blind eye to corruption in the Moldovan bureaucracy."

SUPPORT FOR EU DWINDLES

Sandwiched between Ukraine and EU member Romania, Moldova, a tiny nation of 3.5 million people, embarked on its pro-EU course in 2009 despite its reliance on Russian energy supplies and the unresolved territorial dispute over Transdniestria.

Moldova's decision to sign the Association Agreement with the EU prompted Russia to ban its farm exports - including wine and apples - that are a major source of income for Moldovans.

Between Russia and the EU "there is a geopolitical fight, but we are the ones who suffer. Exports to the EU market have not increased, but we have lost the Russian market," Dodon said.

There are parallels with the situation in Ukraine. When a pro-Russian leader in Kiev shelved Ukraine's own Association Agreement with the EU three years ago, mass street protests drove him from office and into exile. But today, as in Moldova, Ukraine's pro-Western leaders are tarnished by scandals.

The fallout from Moldova's own banking scandal, in which large amounts of money were siphoned overseas over years through dodgy loans, asset swaps and shareholder deals, has been severe for an economy kept afloat since independence in 1991 largely by remittances from Moldovans working in Europe and Russia.

The scandal triggered street protests, the International Monetary Fund and the EU froze aid, the national leu currency plunged to record lows and inflation climbed into double digits.

Former prime minister Vlad Filat was implicated, put in handcuffs live on TV in parliament and later jailed, but many Moldovans believe other members of the pro-EU elite were also involved, or at least complicit in, the scam.

Some ministers in the current government, including Prime Minister Pavel Filip, who came to power amid protests in January, were part of two previous governments that issued emergency loan guarantees to the plundered banks.

The saga has hit support for EU integration, which a survey in April by Moldova's Institute for Public Policy put at 41 percent, down from nearly 63 percent in 2009.

"People believed in European integration and were deceived, because the parties just used this concept to steal money from people," said Sergiu Tofilat, who works for an NGO dedicated to uncovering corruption in the energy sector.

'THE RUSSIANS ARE COMING'

Dodon is well ahead of his 11 rival candidates in the presidential race on around 31 percent, according to an Oct. 19 opinion poll, though he is unlikely to win in the first round and may face a stiffer challenge in a runoff in November.

It is the first time since 2001 that a president will be chosen directly by voters, not by parliament - a concession following the bank scandal to ordinary Moldovans who are angry with high-level corruption and low living standards.

The president in Moldova is more than just a figurehead - he can return laws to parliament, can dissolve the assembly in certain situations and appoints the prime minister. Dodon would not be able to cancel the Association Agreement with the EU, though he has said he wants to call a national referendum on it.

Some EU diplomats believe Dodon's election rhetoric is more about carving out political space than policy substance.

Dodon has told diplomats his party will not scrap the accord, said an ambassador from one EU member state who spoke on condition of anonymity.

Pro-Western candidates meanwhile use the specter of Russian influence to get money from the West, the ambassador added.

The division "is superficial, ephemeral and is being misused by both sides," he said. "'The Russians are coming' card is being used to demand access to (EU) financing."

The ruling Democratic Party's presidential candidate Lupu is standing on a platform of political stability and economic reforms. His hopes for a swift disbursal of loans from the International Monetary Fund worth $180 million suffered a setback on Thursday, however, as it emerged that the cash would likely be delayed until after the election.

Part of the disillusion some voters feel for the West is put down to the influence of wealthy media tycoon Vlad Plahotniuc, who is widely seen as exerting strong influence over Moldovan politics and state institutions and who was a key target of the street protesters earlier this year.

"(Plahotniuc) controls everything in Moldova - the parliament, the government, and right now he wants to take control of the presidency as well," said Dodon.

Plahotniuc, who is deputy chairman of the Democratic Party, was not available to comment for this article, but his allies say his influence is deliberately exaggerated by his opponents.

"(Plahotniuc) is a very hard worker, a very good manager, and he plays a very important role in the internal organization (of the party), in coming up with ideas, solutions," said Lupu.

Others are less sanguine.

Dmitry Chubashenko, another presidential candidate and a former Reuters correspondent, said Plahotniuc's pro-Western views may have sullied the West's image among Moldovans.

Moldovans see the United States backing what many see as "a corrupt regime purely for geopolitical, anti-Russian reasons", said Chubashenko. "And that's of course the source of disappointment in the pro-Western course."

(Additional reporting by Alexander Tanas; Editing by Gareth Jones)

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Airlines scramble to change routes after Israeli attack on Iran
• Take Five: Dancing to the dollar's beat
• China's drugmakers can't sell mRNA shots but haven't quit yet