Moldova’s workers leave country in bad state

By Robert Cottrell

Date: 24/02/05

The latest opinion poll figures from Moldova look good for the government. Which is to say, bad for the country. The ruling Communist Party may well hang on to its parliamentary majority at the general election on 6 March, even if it falls short of the constitutional majority, 71 out of 101 seats, which it won four years ago.

This will be progress of a sort. Stripped of their constitutional majority, the communists will at least have to submit any more bright ideas for the future of the country to proper parliamentary debate and vote.

Two years ago the communists were so pro-Russian that they came within a day of signing a Kremlin treaty giving near-independence to the Russian-backed rebel province of Transdniestr, and so dividing Moldova for ever.

Now, after a spat with Russia, the communists are pro-EU. All to the good. But in another two years? It is anybody's guess.

One reason the communists may do well next month is that the Moldovan economy, though still the poorest in Europe, appears to be growing fast. Unemployment is falling. Wages, in US dollar terms, have almost tripled in five years.

This is encouraging but puzzling news, since in policy terms the communists have done so little right. Moldova's economy, though less criminalised than Transdniestr's, is still a deep, dark pit of corruption, inefficiency and state interference. How can it be doing well?

The answer is that poverty and misrule have driven so many Moldovans out of the country. The remittances they send back are enough to create the illusion of prosperity.

The figures are stunning, to judge from an International Monetary Fund study published this month. About 570,000 Moldovans, or almost 40% of the economically active population, work abroad permanently or intermittently. Thousands more plan to do so soon. Most have left since 1998, when Russia's financial crisis triggered a regional slump.

Moldovans now working in Russia, Italy and Portugal, however menial their jobs, make up to ten times what they might at home, and send half back to their families. That amounts to at least a quarter of Moldova's gross domestic product. Emigration also means a labour shortage at home, which drives up wages there. More or less everyone is happy, for the moment.

The Moldovan communists are especially happy, because so much of the incoming cash gets spent quickly on consumer goods, pushing up tax revenues. This eases pressure on the government to cut public spending, or privatise state industries, or deregulate prices. Those are the sorts of policies which, though unpopular in the short term, encourage private investment and so ensure economic growth for the future.

Without reforms of this kind, economic stagnation at home will continue. Moldovan families will concentrate their sparse capital on equipping children and relatives with the education and the papers needed to get more and better jobs abroad. Only pensioners will be left behind.

Moldova has gone a long way down this road, and perhaps too far to turn back easily. The voters most likely to want a better government will be working abroad on 6 March and are hardly likely to travel a thousand miles or so to the nearest Moldovan embassy to cast an absentee ballot. Their families at home will tend to vote communist again, because state-run television encourages them to.

We in the richer parts of Europe do well from the Moldovans' plight. They bring us more cheap labour, at a time when western birth-rates are falling and immigration from developing countries is less popular than ever. We should be grateful to them. But the collapse of their country seems a rather high price for them to pay.

• Robert Cottrell is central Europe correspondent for The Economist

Preview of Parliamentary elections in Moldova, to be held on 6 March 2005. Opinion polls were suggesting that the Communists stay in power, even if they were to fall short of the constitutional majority, 71 out of 101 seats, which they had won in 2001. Although the Moldovan economy was showing strong signs of recovery, it was said to be largely depending on remittances sent by the almost 40% of the economically active population who work abroad permanently or intermittently.