With Ceban’s election in Chișinău, is a ‘Dodonarchy’ nigh?

On November 4 socialist Ion Ceban won the mayoral election for Moldova’s capital, Chișinău, with 52.39 per cent of votes cast – narrowly defeating his opponent Andrei Nastase, who stood for Prime Minister Maia Sandu’s ACUM bloc.

In a short, measured, and sombre address at the Socialist party’s headquarters, Mr Ceban reassured those who voted for Mr Nastase that he would serve as “the mayor of all the citizens” regardless. Nastase’s supporters will derive little comfort from Ceban’s reassurance. When the ACUM candidate beat Ceban last June, in exactly the same election, and won by almost exactly the same margin, his victory was annulled due to a surprise court decision (which was condemned strongly by both the U.S State Department and the European Union).

The president of Moldova, Igor Dodon (pictured above with Russian counterpart Vladimir Putin), took to the podium to congratulate Ceban. In a tone reminiscent of late Soviet premier Leonid Brezhnev during the latter days of “the great stagnation”, Mr Dodon reminded his protégé and former adviser, that – despite their shared travails as parliamentarians during years of corrupt and ineffectual government – swift results were necessary, as “being mayor was no cake walk”.

Mr Dodon reminded Mr Ceban that “people expect good things for Chișinău [notably] roads and water” before finishing with a huge faux-pas. He reminded Mr Ceban that “concrete results” were sought. It may sound an innocuous statement, of itself, but simply served to remind Moldovans of a string of corruption allegations in the construction sector. Mr Ceban, who had declared war on the city’s “illegal concrete” faced accusations that not all demolitions were strictly for the public good. In February 2018, audio and video recordings surfaced of the mayor elect’s associate expressing outrage at one local builders offer of just 20,000 euros to halt demolition of his development. Upon agreement that a payment of 50,000 euros be made, it was agreed that the builder meet Mr Ceban to have his buildings made legal. Given this story, concerns are high.

To foreign business, Mr Dodon’s words on “concrete” sounded like a Freudian slip. In just five months, Moldova has slipped from potential ally to the European project, with all the attendant advantages for business, in the promise of former education minister turned prime minister, Maia Sandu – into something that literally resembles a family business, whose principal beneficiary is the president and his family.

Mr Dodon’s brother, Alexandru, is the business partner of Igor Chaika, son of Russia’s prosecutor general, Yuri Chaika – who several ranking members of the US House of Representatives, and Senate, are requesting be subject to US sanctions. It may seem improbable to readers in the European Union, but Mr Ceban’s election has buoyed the presidency of a man whose brother has multi-million dollars investments in Moscow real-estate. As Chaika junior’s brother is subject to sanctions imposed by the Global Magnitsky List, the legality of this arrangement must only be due to the protection of diplomatic immunity – as the president’s wife has also received charitable donations from the Chaika family, for her foundation. Mr Dodon, never a europhile, but generally forgettable, poses a threat the Moldovan electorate know well, but is usually viewed as a benign force by Western nations (if not Western lenders). An investigation published last year show shows that Ceban’s criticism of Brussels does not extend to benefitting financially from grants given to stimulate investment.

Today, it falls upon anyone of conscience to remind the European Union that Johannes Hahn oversaw the power-sharing pact which saw Mr Dodon remain president, while Ms Sandu assumed the role of prime minister, and the US State Department did similarly – in full knowledge that Dodon had presided over human-rights abuses, and subjected many minorities to persecution. The man who published these findings was none other than President Donald Trump’s new ambassador to the Russian Federation John J. Wilson. It is now the responsibility of the European Union to check the power of a president who has received approximately one billion euros as grants, budgetary support assistance, and subsidised lending without which Moldova may well have faced insolvency.

The disbursement of funds allocated by the European taxpayer should be remitted on agreement that two basic deliverables be satisfied. The first is that all be allowed equitable treatment before law, including foreign investors who own assets legally in this jurisdiction. The second prerequisite is that Moldova use the reforms sought by the European Union, or budget assistance payments will be suspended – they were frozen until Sandu took office. Mr Ceban will soon be in charge of a significant part of Moldova’s economy, and should understand that if “reform” remains a vehicle for the persecution of political opponents, and the supra-judicial settling of personal vendettas with investors, neither the United States, nor Europe, will continue support. Reform means Moldova’s rebirth as an economically independent state, with an economy that is independent of state interference.

Chișinău is not only Moldova’s capital, but practically its sole commercial centre. The city exists on foreign gasoline, imported automobiles, cell phones and consumer goods. The vast majority of travellers arriving to do business in Moldova alight via Chișinău International Airport – the country’s sole international airport – an atrophied asset previously owned by a Russian aviation company. The company’s representative, and alleged owner, was Ilan Șor – an oligarch who fled Moldova following the regime change this June.

To the surprise of many analysts, NR Investments, a Jersey company, purchased the concession. As an economist, my position is determined by a company’s stability, liquidity, and professionalism – which NR Investments immediately presented to Prime Minister Sandu, and the Minister for the Economy and Infrastructure, Vadim Brînzan. The terms of the deal essentially guarantee investment in the creation of a second runway, and reconstruction of existing infrastructure, in disbursements guaranteed by NR to the sum of approximately 300 million euros. Additional inducements offered by NR include a stipend payable upon growth of passenger numbers, and immediate liquidity to invest approximately 80 million euros by the close of Q4.

The reaction which followed from the presidency was reminiscent of the raider attacks I witnessed under Boris N. Yeltsin’s presidency, whereby committees and sub-committees were formed swiftly to “evaluate” the concession’s legality. Then there were additional laws, clarifications of clauses within those laws, raids on NR’s offices, and searches for documents supposedly secreted within the airport itself. The committee responsible for the creation of the concession was also duly questioned. I find it remarkable that a country which has received such significant assistance from Europe, at a time of significant difficulty for Europe, would feel it permissible to halt a concession with brute force.

Meanwhile, Moldova’s only seaport, which is currently owned by Thomas Moser, faces similar coercion. The Giurgiulesti International Free Port which is owned by Danube Port Networks, and overseen by Mr Moser – a former senior official at the European Bank for Reconstruction and Development – is also being told that his assets may soon be “nationalised”. When I worked in Moscow in the mid 1990s, “privatisation” of a bicycle meant “stealing it”. This is what “nationalisation” now means in Moldova, because from a strictly legal perspective, it is perfectly permissible to return assets to the state in the event that process, and review, occur under applicable domestic and international law.

Yet this is not happening. While NR was raided, and while Mr Moser fights similarly coercive tactics, two of the only companies in Moldova who actually hand tax receipts to the state were absent from President Dodon’s investment summit. The Russian-Moldovan Business Forum in Chișinău is headed by Dodon’s brother’s business partner—so to embattled Prosecutor Chaika, whose brother is subject to U.S Sanctions. This surpasses the commercial definition of “conflict”.

Upon the forum’s conclusion, Chișinău (or Moscow) benefitted. It was reported that a Russian company had inked a deal to rebuild the capital’s road network. In the days that followed, Roman Trotsenko, who owns AEON, noted his interest in the acquisition of Chișinău International Airport, should it be purchasable (following its nationalisation). Dodon subsequently confirmed this a potential outcome. Trotsenko is on the US State Department’s “Oligarch list” and currently suing his former business partner in the US State of Florida, over a romantic dispute.

NRI are now threatening to litigate with the Republic of Moldova under the 2007 Bilateral Investment Treaty held between Moldova and the Republic of Cyprus, which guarantees not simple reciprocity but favourable terms for the owner. President Dodon’s solution has been to form a separate sub-committee (of a sub-committee) barring ownership of concessions by offshore entities. Sandu has not acted as Beria to Dodon’s Stalin, conceding that despite her opposition to the concession, Moldova would certainly lose millions in arbitration.

Mr Dodon has not extended the proposed ban on off-shores to political donations. An investigation led by RISE Moldova showed that the majority of his political party’s donations emanated from between 10-30 fraudulent loans funneled back in to Moldova from offshore jurisdictions. Given business deals which may break laws governing sanctions in several jurisdictions, the European Union must show that international law is enforceable, that visa bans apply, and that the Global Magnitsky Act and US CSA apply to all – even if this is not the received wisdom applied to rule of law in Chișinău.

About the author

Christina Petru

Christina Petru

Christina Carter (nee Petru) is an economist and market analyst who has advised governments, national banks and international lenders in the Commonwealth of Independent States (CIS) and the Russian Federation for several decades. Petru does not advise, and has never advised, any entity, individual, financial institution, or third party organisation which operates or conducts business in the Republic of Moldova.

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