Moldova and the Economic Crisis Posted by James Lamond

The food crisis last year led to food riots and the fall of the government in Haiti.  The global financial crisis led to the collapse of the government in Iceland.  While these situations were certainly devastating for the citizens of the countries, the effects remained relatively isolated.  However the recent political crisis in Moldova has brought some concerns about the security and geopolitical implications of the economic crisis into reality.

First, the financial crisis has hit and will continue to hit the periphery the hardest- especially in political terms.  Contributing to the political turmoil of the elections was the fact that Moldova has been hit hard by a decline in remittances from Europe, due to the economic crisis.  The problems of declining remittances hits some of the most economically and politically fragile states.  In Latin America, for example, the results could be disastrous especially in the already poor countries of Guatemala, Honduras, Nicaragua and particularly El Salvador.  Remittances also play a strong role in the economies of Lebanon, Jordan, Morocco, Egypt and Tunisia.  This decrease in funding from abroad can significantly lead to greater poverty and instability in home countries.

Second, the already tense European-Russian relations could easily be exacerbated by political turmoil in the region.  One of the regions hit hardest by the financial crisis is Eastern Europe.  As the Moldova crisis has proven, the political turmoil can draw in neighboring countries and powers into disputes.  Russia was quick to back up the accusation that Romania, an EU member, was instigating the turmoil and stoking a coup.  This has exacerbated the already tense European-Russian relationship.  And while some say that the financial crisis and low oil prices will reduce Russia’s more assertive foreign policy, Alexander Kliment of the Eurasia Group says that the current crisis may in fact provide an opportunity for expanding Russia’s influence in the former Soviet states.

Third, the long term geopolitical and security consequences of the financial crisis remain unknown but will likely alter currently accepted avenues for international encouragement of domestic reforms in transitional states.  For example, Andrew Wilson of the European Council on Foreign Relations writes in yesterday’s New York Times:

Moldova may be a small country, but it is one of the region’s few democracies. And it is symptomatic of a broader trend. In the global economic crisis there is a real risk of the E.U. stepping back from the “eastern neighborhood” as it plunges into ever deeper crises. Russia, on the other hand, does not fall back on utilitarian thinking in times of crisis. It is investing to win influence in the future.

The possibility of EU membership has been an incredible driving force for reform in many former communist countries.  The lack of this carrot could be devastating for countries like Moldova and its neighbors in the Balkans, who look to EU membership as a guide for reform.

Comments

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I would say economic experts of the IDIS "future" of economic analysis made in 2009 and have outlined the main challenges for 2010. They say that the economic crisis is a temporary residence visa in Moldova and in 2010 things will start to...

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