Moldovans will decide on a president and their European future in elections on October 20.
The stakes are very high. A referendum will ask citizens whether the country’s constitution should be amended to include its wish for EU membership.
Although the question is straightforward and an emphatic “yes” vote would consolidate Moldova’s European trajectory, a “no” vote could threaten its very existence.
It would most acutely reverberate throughout its energy sector, arguably Moldova’s most vulnerable spot, threatening its fragile security through an implicit acceptance of Russia’s destructive influence.
A “no” vote would be understood as a victory for the Kremlin and a serious, perhaps fatal derailing of Moldova’s efforts to align with EU rules for transparency, diversification, competition, and accountability. These are vital in helping to clear the corruption, mismanagement, and fraud that infiltrated its electricity and natural gas sectors, threatening its existence as a country.
Exactly three years ago, Moldova was teetering on the brink of collapse as Russia limited gas supplies at the start of winter, aiming to intimidate the newly elected pro-EU President Maia Sandu and her government.
Pressure in the gas pipelines fell below critical levels and the situation became so desperate that the government introduced a state of emergency and sent engineers to monitor valves in the transmission system for fear of explosions, as government officials recounted in interviews with this author.
It was thanks to EU institutions, the unflinching support of neighbouring Romania and Ukraine, and the solidarity of European energy companies which stood by the Moldovan government that the country managed to secure alternative sources of gas at the last minute, saving its citizens from disaster.
However, the October 2021 crisis was merely the culmination of three decades of relentless corruption and sabotage perpetrated by Russia with help from local officials.
Throughout this period the Kremlin used Moldova’s total reliance on Russian energy resources to stoke up separatism, push it deeper into debt, and isolate it from Europe.
As a resource-poor country, Moldova has historically relied for all its gas needs on Russian imports.
Its dependence on Russia was further complicated because some of this gas was further sent to Russian-controlled Transnistria to generate electricity which would then be returned to Moldovan consumers.
This arrangement hobbled Moldova’s attempts to build its own electricity generation capacity and sever its reliance on the breakaway province supported by Russia’s 14th Army.
It also led to a spiral of crippling debt.
Within years of gaining independence, Russian gas supplier Gazprom doubled the price of gas exports, ensuring the cost was the highest paid by any former Soviet state in the 1990s.
To make matters worse, it also introduced hefty penalties for non-payment, which meant that within a year of having to pay the new price and related penalties, Moldova’s debt exploded, increasing tenfold between January and December 1994.
To clear the arrears and to shield the impoverished population, the government decided to carry out debt-to-equity swaps and eventually transferred its gas transmission and distribution assets to Gazprom.
But over the decades, Russia used the assets to reduce some of the debt racked up by Transnistrian consumers on the east bank of the River Nistru, rather than Moldovans on the west bank.
Even as Transnistria’s debt spiralled out of control, currently exceeding $10bn, or nearly three-quarters of the Republic of Moldova’s annual GDP, Gazprom continues to supply gas to support the local separatist authorities.
An EU-based legal expert who was given access to Moldova’s old Russian gas supply agreement described it to the author as “the most abusive contract that had probably ever been written.”
It was against this dysfunctional background that Moldova decided in the aftermath of the October 2021 crisis to turn decisively towards Europe, seeking support in dealing with its burdensome legacy.
The path has not been smooth. Russia continued to limit gas supplies to Moldova the following winter, while Transnistria cut electricity deliveries even as neighboring Ukraine could no longer be relied on for emergency exports because its own electricity infrastructure was being bombed by Russia.
On several occasions, Moldovans were plunged in the dark, as Russia continued its relentless attempts to sabotage and undermine the small landlocked country of 3 million people.
Nevertheless, thanks to Western support from the EU, the Energy Community, and USAID, Moldova introduced much-needed reform which now allows it to secure gas on European markets and store it in Ukraine or Romania.
Thanks to assistance from Ukraine, it has also disconnected completely from the legacy Soviet grid and has synchronized with the European electricity transmission network since March 2022.
The country is by no means beyond risk.
Until more electricity generation capacity is built and interconnecting lines with Romania are completed later this decade, it continues to depend on electricity supplied from Transnistria using Russian gas.
The cost of gas and electricity is a delicate topic among citizens and Russia has exploited this sensitivity to spread disinformation and stoke up unrest in recent months.
However, the experience of past years shows that in the absence of EU-aligned reform that brings transparency, accountability, and resource diversification, Moldova’s security would be hanging by a very thin thread that could be severed by the Kremlin at any moment.
For that reason, an emphatic yes in the upcoming referendum is not only a vote for a better, more prosperous future but also a vote for Moldova’s existence as a country.
Aura Sabadus is a senior energy journalist writing for Independent Commodity Intelligence Services (ICIS), a London-based global energy and petrochemicals news and market data provider. She is also a Non-resident Senior Fellow with the Democratic Resilience Program at the Center for European Policy Analysis (CEPA).
Europe’s Edge is CEPA’s online journal covering critical topics on the foreign policy docket across Europe and North America. All opinions expressed on Europe’s Edge are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.
