Key Takeaways
Moldovan citizens narrowly approved changes to the constitution, signalling a commitment to EU membership. This result reflects internal divisions over future Moldovan alignment with Europe or Russia.
Russia continues to influence Moldova through economic pressure and political interference. Such Russian actions risk ongoing instability as Moldova navigates its path toward the EU.
The upcoming presidential runoff on November 3rd will play a decisive role in shaping Moldova's future. The outcome will determine the pace of EU-related reforms and Moldova's political stability.
Election Results
On October 20th, Moldova held presidential elections alongside an EU membership referendum, which passed with 50.39% in favour. The elections resulted in a runoff, to be held November 3rd between current President Maia Sandu and Alexandr Stoianoglo, a candidate backed by the pro-Russian Party of Socialists. Despite her initial victory, Sandu denounced widespread electoral fraud, involving pro-Russian NGOs and Moldovan oligarch Ilan Shor. Reports suggest that pro-Russian groups conducted cyber-attacks and paid voters to influence turnout.
EU Funding
Moldova, ranked as one of the poorest countries in Europe, relies heavily on investment and foreign trade for economic growth. Moldova’s largest trade partner is Romania, which substituted Russia prior to 2022.
In early 2024, the European Commission approved a €1.8 billion Growth Plan for Moldova through to 2027. The EU and Moldova have already invested €28.3 million in local companies this year, with significant support for tech start-ups, one of Moldova’s fastest growing sectors.
EU investments aim to modernise Moldova's infrastructure. For instance, last year EIB (European Investment Bank) and EBRD (European Bank for Reconstruction and Development) co-financed a project to modernise the energy grid and accelerate decarbonisation. Other investments were aimed at improving transportation networks and broadband access. The EU also supports cybersecurity and the fight against disinformation, modernisation of the armed forces and independent media.
Russian interference
Moldova remains vulnerable to Russian economic and political pressure. Russia maintains considerable influence over Moldova, particularly through the breakaway region of Transnistria, which houses Russian troops.
Transnistria controls a significant portion of Moldova's energy supply. By 2023, Moldova became far less dependent on Russian gas, but it continues to rely on electricity sourced from the breakaway region.
Looking Forward
Moldova’s Political Future
KSG assesses that November’s runoff will be as important as the referendum, because the new president will ultimately decide the implementation of pro-EU policies and reforms. It would be advisable to delay any investment in the country until after the finalisation of the presidential election.
KSG forecasts that the Moldovan parliament will likely still include a pro-Russian minority and Russia will continue to interfere with Moldovan reforms via Moscow-controlled politicians and oligarchs.
KSG assesses that if re-elected next month, Sandu will confront challenges along the path for EU membership. Moldova's EU accession process will likely last over a decade, and it will be conditional on the country’s capacity to strengthen its electoral system against Russian influence, address corruption and solve the Transnistrian issue diplomatically. These changes, if not gradual, could lead to turmoil akin to Ukraine's situation in 2014.
Energy and Infrastructure
With Russia’s state-owned Gazprom still holding shares in Moldovan energy distributors like Moldovagaz, Russian interference has the ability to cause energy shortages and economic instability. The country will need to continue ongoing efforts to diminish its dependency on Moscow. To achieve this, Moldova is exploring alternatives such as testing U.S. Liquefied Natural Gas (LNG) deliveries and boosting gas imports in anticipation of the end of the Russo-Ukrainian transit agreement in 2025. Previous KSG reports assessed either a reverse gas flow through the Trans-Balkan pipeline, or utilising the "Vertical Gas Corridor" (a cooperative effort to transport regasified LNG imported at Turkish and Greek terminals, along with Azerbaijani gas supplied through the Trans-Adriatic pipeline) as alternatives.
Moldova has taken steps to connect its energy grid to other European power plants and diversify its energy supply. For instance, Moldova presented three energy interconnection projects with Ukraine and Romania along the Soviet Vetrino–Isaccea–Yuzhnoukrainsk powerline. These projects come after several powerline improvements backed by European funds, and would connect Isaccea (Romania) to Chişinău to the South Ukraine Nuclear Power plant in Pivdennoukrainsk. Moldova’s energy sector is largely controlled by state-owned Energocom, limiting private sector opportunities. Soviet-style state dominance prevents significant investment, unless Moldova shifts to renewable sources, where there is likely potential for private involvement. The target increase for the share of renewables for 2030 is 4%, and August 2023 saw Moldova auction its renewable energy contracts, aimed at attracting foreign investment..
The expected EU investments will focus on infrastructure, specifically on improving road networks and reducing border traffic. Investment will also aim to modernise railways, develop naval transport, and enhance air traffic management. The resulting facilitated access to international markets could strengthen Moldovan agricultural exports to Europe, especially wine, which accounts for over 7% of the country’s total exports.
Defence Sector
KSG assesses that substantial investment possibilities in the defence and cyber-security sectors will arise in the near future if Moldova further aligns its legislation with the EU in the area of public procurement and adopts specific legislation on the award of defence and security procurement contracts. Moldova is specifically seeking to acquire air defence capabilities. During the last few years, the country received several financial aid packages from the EU to finance the purchase of Airspace Radar Systems and Air Defence Systems short-range interceptors purchased from the French manufacturer Thales.