As Moldova navigates its path toward energy independence, the country faces a series of complex economic and geopolitical challenges.
The suspension of Russian gas transit through Ukraine, rising energy costs, and growing external debt have put additional strain on Moldova’s economy, already struggling with low GDP growth and a widening trade deficit. Meanwhile, the government’s shift toward European energy markets has sparked debate over the long-term sustainability of this strategy and its impact on the country’s industry and population.
In an exclusive interview with News.Az, Mikhail Poisik, PhD in Economics and former First Deputy Minister of Industry and Trade of Moldova (1995-1997), shares his insights on the real consequences of Moldova’s energy policies, the economic risks of abandoning Russian gas, and the challenges the country faces in securing stable energy supplies. He also discusses the broader implications of Moldova’s political trajectory, the government’s response to the ongoing crisis, and the long-term prospects for economic recovery.
– How will the suspension of Russian gas transit through Ukraine affect Moldova’s energy supply, and what alternative fuel sources is Chișinău considering?
– For Moldova, the primary issue is not the route or origin of natural gas supplies but rather who will be selling the gas and at what price. The current comprador government, eager to align itself with the collective West in its confrontation with Russia, has shifted to purchasing gas on the European market. However, these prices have proven significantly higher than before.
It is worth noting that in 2022, Moldovan Prime Minister Natalia Gavrilița visited Azerbaijan with the stated goal of discussing the purchase of 300 million cubic meters of gas. However, it seems that no concrete agreements were reached.
Meanwhile, official statistics indicate that in 2022, the consumer price index for natural gas soared to an unprecedented 321.7% compared to 2021! While the rate of increase has since slowed, the price still rose by 30.2% in December 2023 compared to December 2022 and by another 27.6% in December 2024 compared to December 2023.
Of course, part of Moldova’s energy is generated from alternative sources, and their share is growing. However, they remain expensive and are not always reliable or stable.
– How prepared is Moldova’s economy for giving up Russian gas, and what long-term consequences might this have for industry and the population?
– Moldova already stopped purchasing Russian gas in May 2023, though Gazprom continued deliveries to Transnistria (which declared independence on September 2, 1990). While Russian gas flowed to the Moldavskaya GRES power plant in Transnistria, Moldova fully benefited from the cheap electricity produced there.
However, with the complete halt of Russian gas transit through Ukraine at the start of this year, electricity and heating tariffs have surged further. These higher costs have become key drivers behind rising production and service prices, leading not only to greater impoverishment of the population but also to a record-high trade imbalance. Moldova’s import-to-export ratio has exceeded 2.5 to 1, an unprecedented figure not just for Europe but likely worldwide.
Specifically, in 2024, Moldova’s total exports amounted to $3,555.1 million—12.2% lower than the previous year. At the same time, re-exports accounted for 23.8% of this already weakened export sector, while imports increased by 4.5%, reaching $9,065.2 million.
Moldova’s GDP growth has also been weak. In 2022, GDP shrank by 4.6%. While it grew by 0.7% in 2023, GDP per capita was only $6,650.6—compared to an EU average of $53,789.1, a staggering 8.1 times higher. In the first nine months of 2024, GDP increased by only 0.6%.
To narrow the GDP gap with the EU, Moldova would need annual growth rates of at least 8%. Such growth was observed in the early 2000s, but current policies do not create the necessary conditions. Science and research funding remains negligible—just 0.22% of GDP, compared to 2.2% in the EU. In absolute terms, given the GDP disparities, Moldova’s investment in science is 81 times lower than the EU average!
While full-year data for 2024 is still pending, industrial production has already declined by 1.1% over the past year.
Another major concern is the rapid rise in external debt under the ruling “Action and Solidarity Party” (PAS). In 2019, Moldova’s external debt was $1,704.1 million. By 2024, it had ballooned to $4,190.4 million—an increase of 2.5 times in just five years!
Since even these borrowings were not enough, the government also ramped up the issuance of government securities (domestic debt), which surged from 23.2 billion to 44.0 billion lei. However, these securities are now being issued at much higher interest rates.
As a result, a growing portion of Moldova’s domestic debt is no longer being used for economic development but instead to service previous debt obligations.
The biggest challenge facing Moldova today is that the government offers little more than hollow promises about joining the EU in the near future. There is no effective reform program to transform Moldova’s social and economic landscape, nor any clear set of development priorities with mechanisms for implementation.
As a result, much of the electorate now perceives the government’s messaging as mere propaganda aimed at retaining power. Meanwhile, the authorities have launched an unprecedented crackdown on dissent, including criminal prosecution of opposition figures on fabricated charges.
Independent TV channels and media outlets are being shut down or stripped of their licenses. Law enforcement and judicial institutions are repeatedly violating legal norms—even former Constitutional Court judges have raised alarms about these abuses.
Former Moldovan Prosecutor General Alexander Stoianoglo has stated that “today, dozens or even hundreds of people are being persecuted for their opinions. The targets include not only politicians but also public figures and ordinary citizens who dare to disagree.”
As the country approaches parliamentary elections, the ruling party is desperately clinging to power, even reshuffling members of the Constitutional Court—a body that could play a decisive role in determining the election outcome. Experts see this as a political maneuver aimed at securing greater loyalty from the court’s judges.
At the same time, disillusionment among Moldova’s most ambitious citizens has led to a massive wave of emigration.
This has severely impacted Moldova’s pension system. The recommended ratio of pension fund contributors to retirees is 2.5 to 1. However, Moldova’s ratio has already fallen to 1 to 1 and continues to deteriorate, with dire financial consequences.
– Given the halt in gas transit, can Moldova rely on EU assistance for stable gas supplies, and what support mechanisms are being discussed?
-At a February 3 press conference, EU Enlargement and Neighborhood Policy Commissioner Marta Kos, Moldovan President Maia Sandu, and Prime Minister Dorin Recean announced that:
“The European Union will provide Moldova with a financial support package to ensure stable gas and electricity supplies, as well as predictable pricing, so that sharp tariff increases do not harm the population’s well-being. The funding exceeds €300 million and includes both emergency assistance and medium- and long-term investments to strengthen Moldova’s energy independence.”
However, these statements did not specify the interest rates or conditions attached to this financing.
Furthermore, the U.S. is currently reviewing its foreign aid policies, including USAID funding mechanisms. USAID has been a major player in global assistance, managing a budget of over $50 billion. Some of these funds have gone to EU member states, and any budget cuts could impact aid to non-EU countries like Moldova.
This raises concerns that previously announced aid commitments might be reconsidered or reduced.