Geopoliticus Georgia and Moldova Remain Fragile as Russian Aggression Continues Maia Otarashvili

January 30, 2015

We are upholding the principal that bigger nations can’t bully the small ones, by opposing Russian aggression and supporting Ukraine’s democracy, and reassuring our NATO allies. (…) today it is America that stands strong and united with our allies, while Russia is isolated with its economy in tethers. That’s how America leads, not with bluster, but with persistent, steady resolve.

US President Barack Obama, State of the Union Speech, January 20, 2014

To be sure, Russia may be isolated, but Vladimir Putin is not retreating. His aggressive maneuvers continue to produce large numbers of military and civilian casualties in Ukraine every week, and there is no sign of improving conditions despite the fact that almost a year has passed since it all began. Ukraine is still in shambles, physically and economically. But how has the crisis in Ukraine affected Georgia and Moldova? Where do these small, fragile hybrid states stand today, and what challenges does their geopolitical location pose for them going forward?

First Ukraine, now Georgia: Russia quietly annexes Georgian territories

Once Georgia became independent from the USSR in 1991, ethnic conflicts broke out first in its South Ossetia region, and later in Abkhazia (in Western Georgia, bordering the Black Sea). At the time Georgia was considered a failed state, like many other former USSR states after they achieved initial independence. Thus its government was incapable of effectively resolving these conflicts with Russia-backed separatists. Both regions declared independence that was not recognized by any state other than Russia, who placed its “peacekeeping forces” in the de-facto republics of South Ossetia and Abkhazia. Since then every Georgian government has unsuccessfully dedicated much effort and resources to resolving the frozen conflicts and reuniting with its breakaway regions. On the other hand Russia managed to closely integrate with both de-facto republics through many means – legal and illegal. The Russian government began handing out its passports practically to anyone who wanted one in South Ossetia and Abkhazia, thus creating a motive for long-term involvement there—its obligation to defend Russian citizens anywhere.

The frozen conflict with South Ossetia reached a new level of complication when a war broke out between Russia and Georgia in August 2008. While each side accused the other of starting the conflict and Georgia’s then President Mikheil Saakashvili’s reputation suffered a great deal over the war, the fact that Russia bombed undisputed Georgian sovereign territory—the city of Gori and its surroundings, located well beyond the borders of South Ossetia, remains unchanged.

The international response to the 2008 war was weak at best. Finally, after five days of war Poland and France brokered a cease-fire deal between the two sides. Once the bombing stopped the situation started to look frozen again, from the outside, but soon after the war ended the Russian “peacekeeping” forces began to build barricades to create a physical border between Georgia and South Ossetia.

While the 2008 war looked like an isolated incident for a while, there is now good reason to believe that this act was Putin’s way of testing the waters. The minor international outrage and lack of any meaningful punishment was what Putin hoped for and achieved. This laid the groundwork for the war in Ukraine later.

While the Ukraine crisis has rightfully been publicized, Russia’s recent moves to annex Abkhazia and South Ossetia have gone practically unnoticed. Recently, as part of his larger strategy of expanding Russia’s borders as well as its sphere of direct influence, Putin made significant advances towards formally annexing Abkhazia and South Ossetia (more so in the latter case). In late November 2014 he and the leader of Abkhazia, Raul Khajimba, signed the “strategic partnership agreement.” According to this document Russia and Abkhazia will join their military forces under Russian command. Additionally, Moscow promised to double its subsidies to Abkhazia to about $200 million in 2015. Moreover, Abkhazian leadership has agreed to integrate its trade laws with the Russia-led Eurasian Economic Union. Thus not only has Putin not given up on his expansionist policies, he is still actively pursuing the idea of the Eurasian Economic Union.

The EU, the NATO, Washington, and the Georgian government all condemned this agreement, but no other tangible moves have been made by either party. The response was so weak that Putin’s government went on to draft another treaty, but this time with South Ossetia, and one that is comprehensive enough that it translates into de facto annexation.

Drafted in December 2014, this agreement is meant to “legalize South Ossetia’s integration with Russia.” Its clauses go well beyond the matters of military integration and include Russian takeover of South Ossetia’s border control, finances, economy, educational, healthcare, and social welfare systems. On the other hand the agreement removes borders and restrictions on movement of goods and people between Russian and South Ossetian territories. The language of this document in itself is all-encompassing, and once the terms of this agreement are implemented, Russia will have truly swallowed South Ossetia, likely irreversibly so.

In addition to this, Russia’s financial crisis and sheer incompetence of the current Georgian government have driven the country into economic turmoil. The Georgian lari devaluated and prices of goods and services have skyrocketed. While Georgia managed to achieve average GDP growth rates in 2014 (real GDP increased by approximately 5.9 percent), the year ended with massive panic among Georgian citizens as the lari continued to plummet to its lowest rates in the past 10 years. In theory the currency devaluation should encourage trade and foreign direct investment, but an array of reforms on foreign ownership of property, labor, and immigration laws adopted by the Georgian government in the recent years had already led to a decrease in investor confidence and ease of doing business in Georgia. Thus its GDP growth forecast for 2015 has already been lowered by 2 percent. The government’s inability to deal with public panic and offer timely explanation to what caused the lari crisis and how it can be resolved is worrisome. No apparent solution for the lari problem is in sight at the moment.

The looming economic crisis in Georgia is partly a result of larger shock waves. However, the loss of territorial integrity is a different issue altogether, thus it is particularly noticeable that Georgian government and media are free of any significant outrage over Abkhazia or South Ossetia. Moreover, the current Georgian government (but not the media or the public) has been very delicate so far in its expression of support for Ukraine or condemnation of Russia’s actions there. Whether the inaction is caused by fear of Russia, or general indifference, Georgia has experienced what looks like irreversible losses in the last year, and is entering 2015 in highly unfavorable conditions.

Moldova Makes pro-EU Choice, but Remains Very Fragile

This past November Moldovans had an opportunity to elect a new government. The Moldovan elections were highly publicized as the deeply polarized geopolitical conditions meant that the Moldovans were going to choose between Russia and the EU. The pro-Western parties prevailed, but no parliamentary majority could be achieved without forming a coalition. By mid-January 2015, almost two months later, a coalition agreement was finally signed between the Liberal Democratic Party of Moldova and the Democratic Party of Moldova. The Liberal Party, previously a part of the pro-Western governing coalition that included all three parties, did not join the coalition. The next step for the coalition is to form an effective government.

Rampant political infighting, corruption, and lack of government effectiveness have kept Moldova in continuous political stagnation, keeping it from implementing much needed reforms in an effective manner, thus earning it the status of “Europe’s poorest country.” Therefore “choosing between the EU and Russia” was not such a straightforward decision to make for the Moldovan voters. While the latent anti-Russian sentiment was reinvigorated by the Ukraine crisis, the alternative to pro-Russian parties—the pro-Western coalition government that had been in charge for the past few years—began to lose its appeal as it became ensconced in continuous political turmoil.

Some of the most recent political scandals included the collapse of the coalition government led by Vlad Filat, who was accused of corruption and abuse of power; a parliament left without a ruling majority from February to May of 2013; and a rift within the ruling coalition that slowed down the implementation of much needed reforms. Finally, to quote a 2014 Bertelsmann Stiftung’s Transformation Index (BTI) report:

The obstacles to any managed transformation in the country remain massive: the structural weakness of the Moldovan economy and thus its absolute dependence on stronger partners, the decades lost in political debate and continuous rearrangement of political loyalties, the unresolved Transnistrian conflict, and the structural havoc wrought by mass out-migration and brain drain. Consequently, any government’s scope of action is limited.

A closer look at the election results directly coincides with the high degree of uncertainty and division among the Moldovan voters. The pro-Russian Socialist Party came in first with 21 percent of the vote, with the pro-EU Liberal Democrats in second place with 19 percent, and the still highly influential and popular Communist Party, led by Moldova’s former President Voronin, in third place with close to 18 percent of the votes. The Socialist Party, which was founded by former Communist Party members, is strongly pro-Russian and advocates abandoning the EU Association Agreement in favor of joining Russia’s “Eurasian Customs Union.” This is an idea that seems to appeal to at least 21 percent of the Moldovan voters.

As the pro-Western parties were preparing to form a coalition, some expected the Communist Party to join in. However, this expectation was proven invalid when the Communist Party members filed a petition to declare the election results null and void. While the Communist Party is not officially against EU integration, and Voronin is not overtly pro-Russian, the problem posed by the party’s strong presence in the Moldovan parliament is two-fold: First, the Communist Party represents a Soviet-era relic (even retaining the hammer and sickle in its logo) that by definition cannot lead Moldova into the European Union nor facilitate the consolidation of its democracy. Second, the Communist Party has a track record of creating long-term uncertainty in Moldovan politics and destabilizing its government. The Moldovan Communist Party has repeatedly prevented opposition parties from forming strong and effective coalitions and implementing crucial democratic and economic reforms. And, thanks to the Communist party’s boycott, the country was left without a president for three years, from 2009 to 2012. On the other hand, 18 percent of the votes represents a serious drop in support for the Communist Party compared to 39.34 percent which it received in the previous parliamentary elections in 2010. However, some commentators have suggested that the votes the Communist Party lost went to the more radically anti-western Socialist Party. On the whole, the popular support for the Party per se has been steadily declining since the early 2000s. The Communists received about 50 percent of the votes in 2001, 46 percent in 2005, and 45 percent in 2009.

Besides the existing domestic challenges, Russian meddling in Moldovan politics continued to be an important factor in 2014. There has been much reason to fear that Moldova might become the next Crimea or Eastern Ukraine. In view of the Ukraine crisis, Moldova’s outlook for making major strides toward consolidating its democracy or achieving further EU integration without severe consequences has begun to look grim. The country had suffered under Russian pressure many times in the past, often economically due to Russian embargoes on Moldovan export products. In addition to this, most Moldovans speak Russian as well as Moldovan, and many of them have family members who work in Russia, and whose remittances greatly support the economy. Thus the degree of Russian influence on Moldova and Moldovans has proven to be so high, that moving closer into the EU orbit can be viewed as playing with fire. Considering the fact that Moldova’s breakaway region of Transnistria falls within Putin’s “Novorossya” agenda, the fear of a Russian takeover was legitimate until the Russian economic crisis began to unfold in December 2014, and became renewed this month as the Ukraine crisis began to take a new turn for worse.

At this point, if Russia were to formally annex Transnistria, it would have to exert serious military efforts that would yield an outcome of too little strategic importance at a very high cost. Directing its military actions against Moldova would mean picking a fight with Ukraine’s Odessa region (in south-Western Ukraine, on the Black Sea), and then invading the sovereignty of Moldova via Transnistria. This would be followed by additional Western scrutiny of a country that is already starting to show signs of breaking down under the pressure of falling oil prices—Russia’s undiversified economy relies on energy export profits as its primary source of income—exacerbated by the effect of Western sanctions. Using the logic of any democratic leader, invading Moldova would not offer a big enough net payoff for Russia, but Putin’s agenda has hardly ever proven to be aligned with a democratic leader’s logic, thus Moldova remains in danger as long as the Ukraine crisis continues.

An unstable Moldova would remain highly susceptible to direct Russian influence, and undermine its ability to attain EU membership. This in turn would enable Russia to continue to meddle in Moldovan politics and exercise de-facto control over Transnistria, but also most importantly—continue to transport energy into Europe using the vital lines that cross the Moldovan territory. Thus, Russia keeping Moldova within reach via Transnistria (Russian “peacekeeping” forces are also well situated in Transnistria) is a savvy strategy Putin will keep up his sleeve as he continues to pursue his expansionist policies.

It was with this strategy in mind that Russia meddled in Moldova’s November 2014 parliamentary elections. In fact, a pro-Russian Fatherland party was banned from participating in the elections just one day before they were held for allegedly receiving Russian funding. This ban by the Moldovan government caused a major uproar among Russian officials, who warned that Moldova should tread carefully going forward and once again banned Moldovan exports to Russia.

However, there are important factors that could help make the case for Moldova’s potential European future. In November 2013, at the fateful Eastern Partnership summit in Vilnius (the event that precipitated the still ongoing Ukraine crisis), in contrast to the Victor Yanukovich government, Moldova initialed and in 2014 signed the EU Association Agreement. Within this framework Moldova was granted visa-free travel rights to the Schengen countries (which Georgia does not yet enjoy, although it also signed the association agreement). The citizens of Moldova have been benefiting from this important new arrangement since April 2014; an incentive that would be difficult to give up for closer ties with Russia, and benefits of which would surely outweigh any painful consequences of reoccurring Russian embargoes on Moldovan exports.

In addition to this, unlike Georiga, Moldova has a strong EU ally in Romania, where recent presidential elections served as encouraging news for Moldova as well as the EU. In Romania, the first round of presidential elections on November 3rd revealed Victor Ponta and Klaus Iohannis as the contestants for the runoff elections. In the second round of elections, Klaus Iohannis emerged the winner with 54.5 percent of the votes. Iohannis is an ethnic German and a former mayor of Sibiu, a well-off town in the region of Transylvania. He represents the center-right bloc via the Christian Liberal Alliance. Iohannis pre-election campaign was based on a promise of a “normal Romania,” free of lies and scandals that the Basescu-Ponta government was characterized by. Ponta’s candidacy was creating a high degree of anxiety among the pro-Western voters and commentators. It was expected that had Ponta won the elections, he would reorient Romania more closely towards Russia and China, following in the footsteps of Hungary’s Prime Minister Viktor Orban. Historically and geopolitically speaking, Romania has reasons for wanting to lead Moldova into the EU. Romanian officials have on multiple occasions stated that it is in Romania’s strong interest to strengthen its ties with Moldova and support its EU membership aspirations. Thus stronger Romania is good news for Moldova as well.

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In sum, both, Georgia and Moldova have had a turbulent year. Some significant progress was made towards achieving the much coveted EU integration in the form of signing Association Agreements with it. However, Georgia is now further than ever from the possibility of reuniting with its breakaway regions, and Moldova is still in serious danger of Russia-instigated domestic unrests (stemming from Transnistria). Both economies will continue to be affected by the shockwaves coming from the ruble crisis, and unless their governments receive competent guidance from the West, they will very likely experience economic crises themselves.

Both countries were previously on a very slow path towards democratization. Georgia and Moldova struggled with consolidating democracy and implementing reforms to achieve good governance, rule of law, development of strong civil society, political culture, and sustainable economy. The democratization processes in both countries were slow and often halted, requiring constant hand-holding from the EU and the US. Thus newly aggressive Russia and the Ukraine crisis further challenged this fragile path for Georgia and Moldova, adding to the uncertainty of their future.

While the West has taken serious steps to punish Vladimir Putin’s government, the Russian people seem to be the only ones feeling the consequences. President Putin is showing no signs of retreating, and is clearly willing to sacrifice Russia’s well-being in order to satisfy his own hunger for power. Thus this is a 21st century authoritarian challenge that the West must face in a creative and rigorous way. Remaining engaged with Ukraine while also encouraging and strengthening Georgia and Moldova will be key to preventing violent Russian expansion.