What is the reason for Chisinau’s desire to “play for time” in relations with Gazprom?

MOSCOW, 26 Nov 2021, RUSSTRAT Institute.

Chisinau’s refusal to pay Gazprom’s bills on November 22 cannot be explained only by the lack of money due to the “cash gap”, as the Moldovan authorities are now justifying it. They had almost a month to fulfil their commitments. Instead, Moldova escalated the situation, which could lead first to penalties, and then to the disruption of the five-year contract that had just been signed.

The Moldovans’ delay for October-November amounts to $74.28 million – in addition to the total gas debt to Russia in the amount of $709 million. The accumulating debt, as well as the very presence of Moldovagaz, half owned by Gazprom, prevent Chisinau from implementing the EU’s Third Energy Package and hinder its movement to Europe.

On the one hand, the new gas price is itchy for Chisinau  – $450 per 1000 cubic meters in November. On the other hand, it wants too much to go to Europe. And it seems that the Moldovan authorities were tempted to “play for time” in order to revise the “unaffordable” contract, and at the same time appear to be a loyal ally in the eyes of Brussels. Such is this contradictory “trick in the Moldovan manner”.

Now the Government of the Republic of Moldova, through the lips of Deputy Prime Minister Andrei Spînu, has promised Moldovagaz $1.4 billion to repay the debt to Gazprom. However, so far these are just words: the contradiction itself has not gone away.

They knew what they were signing

On November 22, Gazprom notified Moldova that it would stop supplying blue fuel to this former Soviet republic within 48 hours if it did not immediately eliminate the delay in payments. Chisinau was supposed to transfer the money the same day, but the payment never arrived.

Moldovagaz did not deny it: it confirmed receipt of the claim from Gazprom and tried to justify itself. It’s all about the balance of payments deficit, is said in its press release. The current tariff in the republic is focused on last year’s purchase price of $148.61 per thousand cubic meters of gas. At the beginning of 2021, it fell to $126.70, and in October it suddenly jumped to $800.62, Chisinau complains. Like saying that because of the cash gap there was not enough money.

Moldovagaz expects that the official authorities of Moldova will help it to pay. Simply put, the money will be taken from the budget. And here the first oddity manifests itself. The fact is that it is not so easy to allocate funds from the treasury of this impoverished country to Moldovagaz now. This will require either introducing a new state of emergency (the previous one expired no later than November 20), or adopting a new parliamentary law.

But something else is more interesting. Back on October 29, at the time of signing the contract, the mentioned Deputy Prime Minister of the Republic of Moldova Spînu signed the protocol on the settlement of issues in the gas sector. It was, of course, about the accumulated debt and the “cool-down model of payment” of imminent non-payments due to the difference between the new price and the previous tariff.

Already back then it was clear that Moldovagaz would need additional money. And at the same time, Spînu confirmed that Chisinau would pay in full and on time. In particular, the Deputy Prime Minister of the Republic agreed with the inclusion in the contract of a clause according to which Gazprom stops gas supply if Moldovagaz does not comply with the payment schedule.

In other words, Chisinau knew perfectly well at the end of October how the deal would end, but for almost a month it did nothing to make the November payment to Gazprom successful. Although up to the termination of the emergency state on November 20, it could safely allocate the required money from the budget.

It is difficult to explain this by the inability of the Moldovan authorities to do the simplest arithmetic operations, the inability to look at the calendar or their unwillingness to raise tariffs for the local population. Especially since it is quite easy to do this after the republic bought gas at a price of $790 per thousand cubic meters in October.

Suffice it to say that Moldovans now pay 6.8 leu (28 rubles) per cubic meter of gas with a consumption of less than 50 cubic meters, whereas when purchasing on the spot market, the tariff could be, according to the same Spînu, 23 leu (95 rubles) per cubic meter.

So the reason for the current delay is not only money. What else is there?

“To play for time”

Let’s take a look at the November events in Moldova from the political bell tower. On November 1, just three days after the signing of the contract, the President of the Republic of Moldova Maia Sandu stated that she did not recognise her country’s supervisory status in the EEU. Like saying that the previous head of state “signed something there”, but “internal procedures in the republic did not take place.”

On November 15, in Brussels, Moldovan Foreign Minister Nicu Popescu once again confirmed his country’s course towards European integration. And two days later, his talks with Foreign Minister Sergey Lavrov ended with an absence of results. For the sake of joining the “European family”, Chisinau still demands from Moscow the abolition of duties imposed in 2014 due to the signing of the Association Agreement with the EU. And it is firmly focused on the implementation of the EU’s Third Energy Package.

The latter implies, among other things, the division and sale of Moldovagaz, 50% of which belongs to Gazprom (plus 13.44% which is owned by Transnistria). This would not only hit Russia’s business interests in the republic, but would also transfer the payment of the gas debt to the category of unrealistic forecasts — because then it would become unclear who exactly should pay.

On November 19, Sandu raised the issue of the audit of Moldovagaz “not being conducted in 20 years” by the Accounting Chamber of the Republic of Moldova. And at the same time, she sent her adviser Veaceslav Negruta to the board of management of this company. All these steps look like preparations for a raider seizure of Russian property— and the current refusal of Chisinau to pay the bills can start this.

To reinforce her position, on the same day, November 19, Sandu disavowed any contact with Tiraspol and in advance called the Pridnestrovian Moldavian Republic presidential election scheduled for December 12 “illegitimate”.

In this context, the unpaid delay on November 22 looks like a desperate attempt by Chisinau — on its own initiative or on the advice of European partners — to “play for time” in gas negotiations with Moscow in order to renegotiate the contract with Gazprom. If it works out, Moldova will at least try to lower the price of gas, and at most, in a way that is beneficial to itself, introduce norms from the Third Energy Package into the new agreement, opening the way for itself to the EU. Of course, everyone in Russia understands this perfectly.

In addition, the current crisis will help Brussels once again present Russia as a “gas blackmailer”, and Gazprom as Moscow’s “political weapon”. And if for the sake of this Europe will need to sacrifice the interests of the impoverished Moldovan population, then why not – let them heat with firewood, maybe they won’t freeze.

Institute for International Political and Economic Strategies – RUSSTRAT

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