PUBLIC DISCUSSION: Sanctions imposed on the Russian Federation have a significant impact on the economy and SMEs in Moldova
Collective sanctions are introduced quickly, but are slowly lifted and their effectiveness will increase over time. The costs of imposing international sanctions should not harm the economies of the countries that impose them. The partial accession of the Republic of Moldova to the international sanctions against the Russian Federation aims to minimize the risks and threats to national security, preventing the loss of competitiveness of the economy from their application. In this sense, the authorities in our country must respond quickly and adequately to the negative consequences of sanctions and provide comprehensive procedures to support the efficiency of Moldovan companies. These are some of the conclusions of the consultative discussion "Regional risks and the impact of sanctions imposed on Russia on SMEs in Moldova and the Transnistrian region", held on November 29. The event was organized by the Center for Entrepreneurship and Economic Policy (CAPE) with the support of the International Center for Private Enterprise (CIPE).
The public discussion addressed the effects of the sanctions imposed on the Russian Federation, regional risks, the issue of the implementation of international sanctions, their consequences on companies from Moldova and the Transnistrian region, but also the policy measures of the Republic of Moldova in this context.
"At this speech, we emphasize both the regional risks, but also the impact of international sanctions on the economy and the private sector in Moldova," said the director of CAPE, Tatiana Lariușin.
"The war deepened all the deficiencies of the current economic model of the Republic of Moldova. The Russian Federation is trying to use companies that have dual purpose influence. This phenomenon is much more profound with the application of international sanctions and somehow this connection between the companies in Russia and the Transnistrian region has intensified during this period. And the dependence on Russian energy resources has made the sanctions to be used as a weapon and blackmail, including Moldova", said the CAPE program director, Ion Butmalai. According to him, the probability of the escalation of the frozen conflict between Tiraspol and Chisinau in the first months after the start of the war created uncertainty among companies, but also among the population.
The war unleashed by the Russian Federation in Ukraine creates political, economic and social risks not only for Ukraine, but also for the entire region, which is an important logistics link and a notorious producer of agricultural products. In response to this aggression, the European Union, the United States of America and other countries introduced collective sanctions against Russia with the aim of limiting its ability to finance military operations and to strengthen the military-industrial complex to continue the war. The dependence of the EU member states on Russian energy resources created favorable conditions for the use of the energy factor as a weapon and method of blackmail both against the EU member states and against the Republic of Moldova.
Moldova joined the collective sanctions in the financial-banking field, and also introduced a series of constraints related to air transport, the visa regime for a number of people from the sanctions list, commercial exchanges with goods with special destination. And although Moldova's economy is small compared to those in the region, the sanctions applied by it aim to comply with the international regulatory framework and prohibit the evasion of sanctions through the Moldovan financial system and minimize internal security risks. Therefore, our country must develop real sanctions policies and procedures for the complex introduction of the sanctions regime in accordance with national interests.
"The sanctions imposed on the Russian Federation affect the competitiveness of SMEs, but economically we have no way to scare the Russians because it is irrelevant. We only have to think that these sanctions do not affect our country's security and prohibit the registration of businesses under sanctions", emphasizes the president of WatchDog, Sergiu Tofilat
For his part, Eugen Cara, head of the Assistance Projects Section within the Reintegration Policy Bureau, added: "On the Transnistrian file, arising from the tense regional situation, we are trying to avoid internal risks and we are interested in standardizing payments and we are thinking about how to properly regulate and we apply Moldova's economic policy measures throughout the country". According to him, according to the data of the Public Services Agency, around 2300 economic agents are registered in the Transnistrian region that meet the requirements of the legislation in force of the Republic of Moldova, and the European market remains the most attractive for them.
Lately, Moldovan investigative journalists have revealed a number of local enterprises in the metallurgical sector and the machine building industry that have ties to metallurgical and military enterprises and maintain economic relations with Russian firms included in the list of sanctioned companies.
"The Russian presence is very significant and massive and has an impact on Moldova's economy. The largest textile producer in Moldova has Russian owners and the Russian presence is also in the field of duty-free or the Airport. In total, there are 898 companies associated with individuals and legal entities from the Russian Federation, such as enterprises that produce electronic components (Mezon, Sigma) or elements for military and civil aircraft engines (ASPA, Topaz, Pribor). And in this year of war, companies with Russian capital continue to be founded", said Ion Preașcă, economic journalist mold-street.md and Rise Moldova.
For their part, the public authorities claim that the Republic of Moldova did not adhere to Western sanctions against Russia because we have a society and an economy vulnerable to such positions, and state policies should be focused on reducing the risks of sanctions on the population and the business environment.
"I don't think that the Republic of Moldova needs to have some sanctioning policies in the current difficult period, but let's focus on reducing the risks of economic agents, because that's our goal. And our committee should initiate these discussions. These days we are also coming with a draft law on reinsurance in the Russian Federation", says Valentina Manic, deputy in the Parliament of the Republic of Moldova, Economy, Budget and Finance Commission.
"The agricultural sector remains very susceptible to sanctions. Aligning with sanctions from the point of view of agricultural policies is a delicate subject from the perspective of rising prices of raw materials and inflation, but also the marketing of agricultural products on new markets. On the one hand, we have the problem of agricultural producers who export goods to the Russian Federation, and on the other hand, there is the problem of importing deliverables from the Russian market, such as fertilizers, which represent an 80% share, and many remain nowhere to be found on the EU platform fertilizers we need", says Ghenadie Rusu, from the Ministry of Agriculture and Food Industry.
As a result of the decision of the Russian Federation to recognize the non-government-controlled areas of Donetsk and Lugansk regions as independent entities and the military aggression against Ukraine on February 24, 2022, the United States of America, the European Union and a number of other countries of the world have imposed sanctions against hundreds of Russian organizations and over 1000 individuals.
Consequently, a package of individual and economic measures targeting the finance, energy, transport and technology sectors as well as visa policy has been applied. It is relevant to mention that the Republic of Moldova has not officially aligned itself with the package of sanctions against the Russian Federation. Regardless of the fact that the state of the Republic of Moldova has not imposed any sanctions on the Russian Federation, the effect of these sanctions directly affects both the banking system of the Republic of Moldova and the local business that benefits from international transfer banking services.
The Center for Entrepreneurship and Economic Policy (CAPE) is an independent analytical center whose mission is to support the development of democracy and a functioning economy through public policies focused on the development of the private sector and the stimulation of private initiative. Through this, CAPE supports the participation of the business environment in the democratic process, the promotion of well-structured public-private dialogue, offers support to associations through expertise, facilitating the introduction of international anti-corruption and conduct standards, training and knowledge transfer.
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