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Rampant corruption and poor performance of public institutions have slowed down Moldova’s European integration in the last 10 years
Date: 17.06.2015   

During 2005-2014, Moldova saw important progress in terms of European integration - signing the Association Agreement, visa liberalization with the EU, ensuring more respect for human rights, providing e-governance, IT sector and social services’ reform. However, major weaknesses remain in a number of sectors, particularly in fighting corruption, banking sector, implementation of EU quality standards and energy sector. Therefore, despite some progress, rampant corruption, politicization of public sphere and poor performance of public institutions indicate that in the last 10 years reforms have been promoted under external pressure, with little ownership and limited political will to reform. These conclusions are presented in the Progress Report “Moldova in the Eastern Neighborhood Policy: 2005-2014” presented by Association for Participatory Democracy ADEPT and Independent think-tank EXPERT-GRUP on June 16, 2015.  
In this period, the legal and regulatory framework of the justice sector was substantially revised, and new institutions have been established. Despite these efforts, justice reform develops slowly, being hindered by lack of genuine political will to reform, politicization of the appointment process in justice system key functions, but also due to insufficient financial resources for the reform. Legislative and institutional efforts in combating corruption have not reduced corruption. On the contrary, corruption has increased, causing public discontent. This is determined by the high degree of political dependence of the anticorruption agencies. The discrepancy between human rights and freedoms enshrined in the official legislative acts and everyday practices continues. At the moment, Moldova  has a solid legal framework for the promotion of human rights, but there are significant gaps in the implementation process, a situation determined by the poor quality of the Moldovan justice sector. To reach a settlement for the Transnistrean conflict, a “5 + 2" negotiation format was established, followed by the unification of the customs procedures at Moldovan-Ukrainian border, and the launch of EUBAM mission. EU-Moldova Association Agreement substantially changed the regional context, creating conditions for involving Transnistrian region in the DCFTA processes and subsequently for the political settlement of the conflict.
Trade relations with other countries have experienced important progress due to commitments under the World Trade Organization and deepening trade relations with the EU. Exports to the EU increased from EUR 440 million in 2005 to over EUR 1.1 billion in 2014, the Community Area becoming the main market for Moldovan products. Still, in order to further exploit the country's export capacity and benefit of DCFTA, more efforts are needed to adopt EU quality standards. Opening a business in Moldova has become easier in the last nine years, due to the implementation of one-stop shops for enterprise registration and the reduction of the amount of required documentation. However, obtaining permissive documents, especially construction permits, remains very problematic. The social protection system was reformed structurally and institutionally, through the establishment of several institutions that are designed to facilitate better services and a fair application of regulations. Still, the prolonged pension system reform and low efficiency of social aid distribution remain crucial issues.  In terms of employment, international agreements on migrants’ social protection have been signed with 14 countries, but not with Russia, which remains the most important destination for Moldovan migrants. Inside the country, the informal employment remains an important issue, a matter that has to be addressed by improving business conditions and tax regulations. Financial services remain underdeveloped in terms of both quality and size, with a digital infrastructure that is well below the modern standards, especially at the local stock exchange. In addition, the recent problems in the banking industry show that there are significant deficiencies in supervising the sector.

The report was elaborated under a project implemented by ADEPT and Expert-Grup with the support of the US Agency for International Development (USAID) through the East European Foundation and FHI 360. This report is made possible by the generous support of the American people through the United States Agency for International Development (USAID). The contents are the responsibility of the authors and do not necessarily reflect the views of USAID, the United States Government, FHI 360 and / or East European Foundation.
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