VZCZCXYZ0003
RR RUEHWEB

DE RUEHCH #0493/01 1761414
ZNR UUUUU ZZH
R 251414Z JUN 09
FM AMEMBASSY CHISINAU
TO RUEHC/SECSTATE WASHDC 8097
INFO RUEHMO/AMEMBASSY MOSCOW 3278
RUEHKV/AMEMBASSY KYIV 0646
RUEHBM/AMEMBASSY BUCHAREST 4334
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/USDOC WASHDC 0754

UNCLAS CHISINAU 000493 
 
STATE FOR EUR/UMB, EUR/ACE, EEB/OMA 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EINV EREL ETRD MD
SUBJECT:  VORONIN VISITS MOSCOW AND RETURNS WITH USD 500 
MILLION LOAN - NEXT STOP BRUSSELS 
 
Sensitive but Unclassified.  Please Protect Accordingly 
 
¶1. (SBU) SUMMARY:  President Vladimir Voronin traveled to 
Moscow on June 22, and held bilateral meetings with both 
President Dmitrii Medvedev and Prime Minister Vladimir 
Putin.  Following his talks with Voronin, Putin announced 
a USD 500 million credit to Moldova.  Some media reports 
quoted Putin as saying that some funds might be available 
in two to three months.  However, at a press conference 
in Chisinau, Voronin indicated that the first tranche of 
funds would not be available before the end of the year. 
Political opposition leaders, including Marian Lupu and 
Vlad Filat, later expressed concerns about the loan and 
its conditions.  Voronin is planning a trip to Brussels 
later in the month to meet EC and EU leaders.  SUMMARY 
 
VORONIN'S TRIP TO MOSCOW 
------------------------ 
 
¶2.  (SBU) The main purpose of President Voronin's June 22 
visit to Moscow was to mark the 68th anniversary of the 
Nazi attack on the Soviet Union on June 22, 1941.  He 
participated in the memorial ceremony and laid flowers at 
the Tomb of the Unknown Soldier.  He later met with both 
President Medvedev and Prime Minister Putin.  This visit 
was perceived by many in Chisinau as an attempt to win 
electoral support from the Russian-speaking population in 
Moldova by showing off the President's good relations 
with Russia. 
 
¶3. (SBU) During the one-day official trip to the Kremlin, 
Voronin sought to obtain financial assistance from Russia 
to support the Moldovan economy on the eve of elections. 
Originally, First Deputy Prime Minister and Minister of 
Economy and Trade Igor Dodon and Minister of Finance 
Mariana Durlesteanu planned to accompany Voronin.  At the 
last minute, Dodon did not travel.  Voronin's inclusion 
of his economic team stressed the important role of 
economic issues on the agenda, i.e., a Moldovan request 
for financial support. 
 
¶4.  (U) Medvedev's joint press conference with Voronin 
after their meeting focused primarily on his political 
support for Moldova.  Medvedev praised Voronin for the 
GOM's actions to restore constitutional order in the 
republic after the political unrest of April 7.  Voronin 
said that "in those difficult days when there were 
attempts at political destabilization," Russia was the 
first country to support the GOM.  The interlocutors made 
no mention of a Moldovan request for assistance during 
the press conference. 
 
PUTIN MEETING AND THE USD 500 MILLION LOAN 
------------------------------------------ 
 
¶5. (U) Putin announced a Russian loan of USD 500 million 
following his meeting with Voronin.  The first USD 150 
million installment of the USD 500 million loan would be 
allocated in the shortest possible time, according to 
Putin.  Some media quoted Putin as stating that the first 
tranche of USD 150 million could be available in two to 
three months.   Putin noted that he would appeal to the 
Russian parliament to approve the credit and amend the 
Russian state budget to include the loan.  Voronin said 
that Moldova had proved its good faith and had honored 
all obligations in the financial area.  Voronin stated at 
a press conference in Chisinau on June 24 that the funds 
would not be available before the end of the year.  He 
explained that the credit would be directed to investment 
programs, infrastructure development and construction of 
roads.  He added that Russia had also granted the GOM USD 
20 million for the restoration of the parliament building 
and presidential administration damaged in the political 
unrest of April 7.  He noted that other possibilities 
existed for the use of the funds, depending on the 
financial and economic situation in Moldova.  Further, he 
underlined that the money would not be used for 
consumption.  Regarding the IMF, Voronin said that the 
loan should not impact Moldova's relationship with the 
IMF.  (Note:  Moldova's previous IMF agreement expired in 
May and an IMF mission was unable to negotiate a new 
accord.)  Voronin noted dismissively that the IMF behaved 
like a wife who dumped her husband from time to time but 
always came back.  He pointed out the IMF left in 2001 
 
when the Party of Communists of the Republic of Moldova 
(PCRM) came to power only to return in 2005 when the GOM 
had made great strides forward. 
 
LIBERAL DEMOCRATIC PARTY LEADER CRITIZES LOAN 
--------------------------------------------- 
 
¶6. (U) Moldovan parliamentary opposition leader Vlad 
Filat said that Voronin had made a mistake in going to 
Moscow and requesting financial assistance.  Filat, 
leader of the Liberal Democratic Party (PLDM), stated 
that the GOM might have problems negotiating a new IMF 
agreement in autumn.  Filat demanded that Voronin provide 
information on loan maturity, interest rate and the 
targeted investment projects of the loan.  The PLDM 
leader speculated that the investments might be intended 
for Voronin's son who has interests in construction 
firms.  Filat accused the ruling PCRM of having missed 
opportunities to secure grants from foreign donors. 
Specifically, he suggested that the GOM had missed out on 
a USD 500 million grant from the Millennium Challenge 
Corporation which would have allocated USD 300 million to 
road rehabilitation (sic).  He further accused Voronin of 
using his trip to Moscow to secure the loan as a campaign 
event in advance of parliamentary elections scheduled for 
July 29. 
 
EX-SPEAKER MARIAN LUPU VOICES CONCERNS 
-------------------------------------- 
 
¶7. (U) Marian Lupu, former speaker of the parliament and 
now leading candidate of the Democratic Party, stated 
that the loan would not reach Moldova until the end of 
2009 or beginning of 2010 at the earliest.  He explained 
that the Moldovan parliament and government would need to 
complete a complex series of legal and technical 
procedures to facilitate a loan accord.  The previous 
Moldovan parliament was dissolved on June 16 after 
failing to elect a president and the new parliament to be 
elected on July 29 would not convene until some weeks 
afterwards.  Lupu emphasized that it was very important 
to publish the terms of the Russian assistance.  He 
indicated his keen interest in knowing whether the loan 
included grant components and low interest rates.  The 
Democratic Party, according to Lupu, would like to see 
the funds used exclusively for the rehabilitation of 
Moldovan roads.  Former Moldovan Minister of Economy and 
Trade, Valeriu Lazar, who is running in the second slot 
on the Democratic Party ticket for the upcoming 
elections, doubted that the loan included good terms for 
Moldova.  He noted that Russia had recently negotiated a 
financial assistance deal with Kazakhstan that contained 
very unfavorable terms for Kazakhstan. 
 
VORONIN PLANS TRIP TO BRUSSELS 
------------------------------ 
 
¶8.  (SBU) Foreign Minister Andrei Stratan stated in an 
interview with the newspaper Timpul on June 18 that, at the 
end of the month, Voronin would go to Brussels to meet with EC 
and EU leadership.  He said Voronin would discuss bilateral 
relations, EU aspirations, relations with Romania, and the 
visa regime for Moldova.  Stratan underlined that Voronin 
would try to convince Brussels that AMoldovans could now be 
granted a visa-free regime as those who wanted to leave the 
country have already done so.  We have heard that this visit 
was originally scheduled for June 29, but as key European 
officials will be at the OSCE Ministerial in Corfu that day, a 
new date must be found. 
 
COMMENT 
------- 
 
¶9. (SBU) Many political observers see Voronin's trip to 
Moscow as political theater for the domestic audience. 
The PCRM hopes to garner voter support from the Russian- 
speaking population for the upcoming elections.  Given 
the fact that a recent IMF mission did not negotiate a 
new agreement with the GOM and that the GOM is facing a 
large budget deficit, Russia is apparently Moldova's only 
potential source for financing.  However, the funds will 
not address the immediate need the GOM has for budget 
support which is the country's most pressing concern. 
With elections on July 29, the GOM will make the payment 
 
of salaries and pensions a priority in order to ensure 
support from the PCRM's base.  The fact that the GOM is 
four months in arrears on VAT refunds is evidence of how 
tight cash is. 
 
¶10.  (SBU) Analysts and opposition politicians speculate 
that Moscow's loan contains a quid pro quo.  In a press 
conference last week, Dodon mentioned privatization of 
the energy sector as one way to replenish the growing 
budget shortfall.  The Russians are known to be 
interested in Moldova's natural gas distribution network 
and gas transit pipeline.  GazProm already owns 50 
percent plus one share of the Moldovan gas distribution 
company, Moldovagaz, and controls Transnistria's 13 
percent share.  Down the road, Russia may envision 
forgiving Moldova's debts in exchange for acquiring the 
remaining shares. 
 
¶11.  (SBU) Voronin denied these rumors in his press 
conference on June 24.  Some analysts believe the funds 
will be contingent on the results of parliamentary 
elections.  Should the PCRM remain in power, it is 
questionable whether Russian funds will ever be 
allocated.  Russia is facing a GDP decline of five to ten 
percent for 2009, promised USD 3 billion to Kazakhstan, 
USD 2 billion to Kyrgyzstan USD and a further 350 million 
to Cuba.  Russia held up the final tranche of USD 500 
million in a USD 2 billion loan for Belarus this spring 
questioning Belarus' ability to repay the loan.  There 
have been press reports and rumors in Moldova of a loan 
from China circulating for several months but no concrete 
developments have surfaced.  Voronin's trip to Brussels, 
coming on the heels of the Russia trip, could be a signal 
that despite whatever deals were made in Moscow, Moldova 
is still intent on pursuing European integration. 
 
CHAUDHRY