VALERIU PROKHNITSKY, IPP economic expert
1.4. The Factors that Contributed to the Economic Insecurity of the Republic of Moldova
it holds, the Republic of Moldova cannot compete with other countries in the region.
Table 1. Defence Expenses of Black Sea Regional Countries, 1999 Russia Turkey Ukraine Bulgaria Armenia Moldova Greece Defence Expenses,
million USD, 1999 69.537 6856 500 379 75 6.1 4040 Defence Expenses,
% of GDP, 1999 8.7 4.3 1.4 2.7 4 1 4.0 Source:  and calculations made by the author.
The economic condition of most countries included in this table has im- proved to some extent since 1997, while Moldovas has worsened significantly. For this reason, in 1998 the funding of the armed forces of the Republic of Moldova was sufficient to cover only up to 37% of the needed expenses! Only 10% of the military budget is used to preserve the defence potential as such at an acceptable level. Over 60% of state budget funds are used to pay personnel and to provide food and food compensations. For the acquisition of weapons only about 1% of the budget was allocated for that purpose, which is totally insufficient to equip the armed forces that have been created only several years ago. If the armed forces will be under-funded for any longer, experts forecast that in ten years at most they will be absolutely unusable for fighting. Given that the Transdnistrian conflict has not fully settled yet and the military potential of the Transdnistrian paramilitary forces, together with the Limited Contingent of the Russian Armed Forces in Transdnistria is about three times the size of the national army, we may conclude that it is not at all improbable that the central government may become politically dependant on the Transdnistrian government rather than vice versa, as it would be natural for a unitary state.
1.4. The Factors that Contributed to the Economic
of developing information technology and computerisation, which was common for most former Soviet Republics. Other factors were characteristic to the Repub- lic of Moldova only, such as the historical-economic, political-psychological, ethno-demographic, and ethno-psychological ones.
Moldova was always treated as a province under various occupations and, unfortunately, even as a part of the Romanian Kingdom and this was reflected in the economy of the country. The Turkish and, most of all, the Russian occu- pation have conditioned a narrow economic specialisation, the excessive expan- sion of the arable land by deforestation and have conditioned the creation of a rudimentary industry. The numerous changes of the borders have caused the chaotic development of the infrastructure, especially in the south. It has im- pacted the economy of the country that was undergoing a steep decline until the middle of the 19th century. The old trade routes gradually shifted to the east, to the Ukrainian port of Odessa, and to the southwest, to Bulgarian and Romanian ports. The same shape of the trade routes has been kept up to now and it keeps Moldova from becoming a true conduit between the East and the West, the North and the South. Such opportunities are available to those who have access to the Black Sea. The strategic and geo-economic importance of having access to the Black Sea was also proven by the economic decay of Moldova during the Middle Ages, resulted from Turkey winning over of the towns of Cetatea Alba and Chilia.
Certainly, the significance of geographical factors has decreased heavily since technical progress (new types of transportation), but, as the international rela- tions history shows, the access to the sea may be vital for ensuring the economic security of small countries.
Under the Russian government, the Bessarabian province was one of the most agrarian provinces of the Russian Empire. It was partially due to the plain relief, the temperate climate, and the fertile soil, combined with the Tsarist colo- nisation policy that favoured the excessive expansion of agriculture. On the other hand, the traditional imperialist isolationism and the reticence of the Russian public officers towards the industrial revolution contributed to the establishment of a defective economy that a decade ago still lacked clear external economic objectives. Until the late 1980s the Moldovan economy was still isolated from the internationalisation processes; thus, it is hard to refer to the use of our own positive experience to promote external economic interests, as we lack both the experience and clearly defined economic interests.
As a member of the USSR, Moldova was exposed to intensive economic exploitation and this is the reason why it is facing serious ecological problems.
Despite all positive achievements, the socialist-model economy of Moldova could not operate for very long, as it comprised profound internal contradictions and was based on a hypertrophied ideological foundation. An archaic model of for- eign economic relations was imposed on the Moldovan Soviet Socialist Republic;
it was given the role of a raw supplier of agricultural materials, a consumer of industrial products and a structural element of the military-industrial complex. By and large, the Soviet economic system, with its adjacent physical and social structure, was designed in such a way that its political disintegration of the Empire was impossible, and an eventual disintegration would have caused an economic decrease, which would have caused a revival of the re-integration trends at the peripheries of the former empire. The example of the Republic of Moldova illustrates very well this principle of the Soviet economic planning, as within the USSR Moldova was depending both on other markets for the products of its agro-industrial complex and on the regular raw materials supplies for several industrial sectors of military and strategic significance.
The scope of the economic crisis that accompanied the disintegration of the USSR was aggravated in the Republic of Moldova by the mistakes made in the economic and financial policies. First of all, the public lost all the savings depos- ited in the Moldovan banking system, and the national currency was introduced with some delay, which favoured inflation import from Ukraine a country that introduced a national currency at an earlier stage.
The current economic deficiencies of the Republic of Moldova are heavily determined by the resistance of the politicians unconsciousness in orienting the politics towards the investment and production (geo-economic) model of foreign economic relations, the resistance originating from the former centralised politi- cal-economic system. It was easy to notice during the Sangheli government, when the reforms initiated by the two previous governments were subdued and priority was given to the former model of priority agrarian development. In fact, the curious phenomenon of rejecting earlier achievements and of rejecting liability for the eventual repercussions of the actions undertaken by former governments was consistently a defining feature of most governments that came to power in Moldova during the last decade. The same stereotypes are followed currently by the Communists who, from political and strategic reasons, and by no means from economic and financial reasons, intend to dissolve the counties and prefectures and return to former administrative-territorial structures.5
It is not accidental that the Communists have undertaken a rather vague political course at first sight when they came to power, as they concealed a firm geo-economic pro-Russian orientation, dictated by an inferiority complex
5 There are two major reasons why the Communists want to restore the old administrative- territorial structure of the country. First, the internal structure of the Communist Party is based on the former district structure. When counties were established, the Communists lost important financial and administrative levers. Secondly, a new administrative-territorial reform also means extraordinary local elections that would benefit the Communists that long for a quick victory, as time is a factor that disfavors them.
concerning economic and political management. In reality, inferiority complexes were always present in the political course and actions undertaken during the last decade, though it was somewhat shadowed by conjunct pro-European traces. In the Republic of Moldova a firm pro-European political and economic orientation never existed.
This proves that three major issues stand in the way of ensuring the eco- nomic security of the Republic of Moldova. First, the central and local adminis- tration does not understand very clearly the economy, in general, and economic security, in particular. Secondly, the opinions expressed by politicians regarding regional economic phenomena and international economic relations are often void of any logical basis and are heavily loaded with ideology. The most striking cases are the analyses of the regional geo-economic framework made by the president and the speaker of the Parliament and the external economic solutions that they recommend.6 Thirdly, the external political environment is not appreci- ated correctly and the economic security of a small country depends heavily on it. The focus on Russia promoted by the current government will be proven wrong, as this country is facing an economic and political separatism that is difficult to hide, and once the external circumstances that condition economic growth (pri- ces for oil, raw materials, weapons) disappear, Moscow will lose the economic lever that is very important for keeping control over the entire territory. Another extremely important factor is the poor awareness of most politicians concerning finance and public administration, and the deeply rooted habit of acting by following the orders of central decision-makers.
Besides, the Republic of Moldova is also a country of varied political prefer- ences, which is proven by the numerous parties and political movements. This caused the disintegration of the Moldovan society by political criteria, which made impossible for the eight former governments to get real opportunities to gain mass social support of the population, in order to implement reforms.
As history and recent events show, ethno-demographical factors may play a very important role in achieving economic success and ensuring economic secu- rity. Poland, Japan, Korea are the most quoted examples of ethnically homog- enous countries that achieved economic success during different historical peri- ods. Generally speaking, the more dispersed a country is (by various criteria ethnical, religious, social, cultural, or ideological), the less are the chances for successful socially acceptable economic and political reforms. If a society is split up ethnically, but is homogenous by social criteria, there are chances for uniting the society by a national idea, such as, for instance, the economic prosperity of the country, the integration in Euro-Atlantic structures, etc. However, the Republic
6 As one can see from the political speeches of President Voronin, it is necessary that Moldova joins as many regional structures as possible CIS, EU, Russia-Belarus Union, Euro- Asian Economic Community, etc.
of Moldova is split by several criteria that, on the other hand, it displays a visible correlation between the ethnicity and its economic power.
After World War II, the Moldovan Soviet Socialist Republic has undergone fervent industrialisation following the Stalinist model, which was conditioned by the pragmatic reasoning of the arms race and the ideology of educating a true Moldovan labour class. Communist leaders envisioned the achievement of these goals by increased inter-republican labour mobility, i.e. mostly by transferring to Moldova a Russian population. From 1959 until 1985 the number of Russians inhabiting Moldova increased by 213,000 (173%), which is an absolute record for the Soviet Union. Most immigrants were given jobs and dwelling in urban areas, and urban population grew twice as quick as the rural population. During 1970- 1979 the Moldovan population growth rate was two times less than that of the Ukrainians, Russians, and Belarusians. The share of Moldovans decreased to 64%
in 1979. Despite the declared principles of national equity and social federalism, the representatives of other nationalities held the key positions in the political and economic top management. Pursuant to Soviet migrations policies, the share of the Moldovan population in urban areas decreased significantly. In 1989 Moldovans amounted to 42% of the population of Chisinau (the capital city of Moldova), 37% in Balti, 25% in Tighina, and 49% in Cahul. Thus, the Moldovans have had (due to the well known phenomenon of demographic inertia) less business opportunities than the representatives of other nationalities. The repre- sentatives of the minorities are not well represented in state administration bod- ies, but, on the other hand, are very active in business activities and control impressive economic powers, which undoubtedly impacts the national economic security in a negative manner. Businessmen coming from this environment focus mostly on foreign trade and use their capital to establish major Moldovan-Russian joint ventures, thus determining the geographical orientation of foreign economic relations. When it comes to major political and economic issues starting from the expansion of the European Union and Moldovas joining the Russia-Belarus Union and ending with citizenship and linguistic policies, the minorities tend to identify with the official political course of their historical Motherland.
During the mid-1980s, the managers of the most important plants and fac- tories were Russians and Ukrainians, while Moldovans were represented more in healthcare, culture, education, light industry, social services, and trade. Such an asymmetry of the economic potential has facilitated the division of Moldovan society, however, not so much by ethnical criteria but by political criteria, between the ones who wanted to keep the Communist economic and political system and the ones who chose social change. Notwithstanding the fact that the societys split-up boasted a political origin, the conservative economic and political elite have managed to attribute to it an ethnical dimension, counting mostly on the Russian and Ukrainian population, as well as the Russified population in Transdnistria and the Gagauz inhabiting the southern part of Moldova. Thus, when in Moldovan society transparency (glasnost) and restructuring (perestroika)
gained ground and it was clear that this would inevitably lead to national revival, these elites have managed to cause strikes at over 150 plants and factories in Moldova to prove the dissatisfaction of the management and of the staff with the economical and political transformations in Moldova.
Pursuant to Communist demographical and social experiments, the Moldo- vans possibilities to fully and fairly take part in privatisation in the early 1990s were limited. Although the Moldovans comprise 65% of the population of the Republic of Moldova, they are poorly represented in the top businesses. How- ever, it was not only the events that have taken place during the last couple of decades that conditioned the formation of a psychology characteristic of the Moldovans. A major ethno-psychological characteristic of the Moldovans that was mentioned long ago by Dimitrie Cantemir is their predilection for agriculture and much less for trade and industry, which are the most dynamic and profitable sectors of an economy. The fatalism and some detached contemplation are the two distinct ethno-psychological characteristics that determine a rather low eco- nomic potential of a numerically predominant demographical segment.
Certainly, these psychological features are true only at the level of statistics and there are numerous example of individual success of the representatives of the majority population. However, from the hundreds of thousands of Moldovan emigrants that are employed abroad by season or temporarily the majority are Moldovans. Russians and Ukrainians have a more developed trader psychology, they prefer to start business in Moldova rather than go abroad. By and large, Moldovans avoid risks as individuals, while as a group they behave in a more dynamic mare and can be even slightly aggressive.
These preferences denote an inferiority complex characteristic of the Moldo- vans, which can be observed easily in public transportation, in markets, and in higher education institutions. This complex is also aggravated by the fact that Moldovans, in fact, are a sub-nation, a part of the Romanian nation, which inevitably leads to the duplication of the national identity of the citizens of the Republic of Moldova. As a matter of fact, this complex was created during the last couple of decades pursuant to Russias denationalisation and Russification poli- cies. For this reason, during the Soviet times some filters were created that limited the social mobility of rural inhabitants who were predominantly Moldovan.
With some exceptions, graduates of professional schools and college graduates from villages were made come back to the country,  which limited their pos- sibilities to get involved in scientific researches, factory and plant production, economic and financial planning, etc. Therefore, even if they comprised over 65%
of the total population, Moldovan held only 40% of medium-level and top-level positions in administrative bodies.
Given these specific ethno-demographical features, one can note significant differences between the economic potential controlled by Moldovans and the economic potential controlled by the representatives of other nationalities. These differences, as the experience of other countries shows, may be easily manipu-
lated by interested politicians, which may eventually lead to tense social relation- ships and poor social security.