Moldovan Gas Crisis Reveals Vulnerability to Russia’s Weaponization of Energy Supplies
October 30 marked the beginning of a gas crisis in Moldova, shortly after the government declared a state of emergency. Moldova failed to secure a new deal with Gazprom, a Russian state-owned gas company, which has long been the main energy supplier for a small post-Soviet country of 2.6 million people. The energy crisis Moldova started after the Russian company raised its rate from 250 USD to 800 USD per thousand cubic meters, a rate Moldova would not be able to afford to pay. Even though Moldova tried to extend the energy contract under the previous terms, Russia showed reluctance to prolong the contract due to Chisinau’s ‘historical debt’ to Gazprom, which, as Gazprom claims, is nearly 710 million USD. With the previous contract having expired and Chisinau having to pay back the debt, the country found itself stranded ahead of a cold winter.
Moldova’s gas crisis followed the Kremlin’s generous energy deals with countries it considers its ‘friends.’ On November 4, Belarusian President Alexander Lukashenko succeed in securing prices 7-10 times lower than any country across Europe. Similarly, Serbian President Aleksandar Vucic has been expecting ‘advantageous rates’ from Moscow. In this situation, Moscow’s attempt to increase pressure on Moldova through its gas supply, for the most part, is politically motivated.
Moldova has been led by Maia Sandu since November 2020, after she won the presidential race against the pro-Russian candidate, Igor Dodon. Since then, the country’s first-ever female president has been eager to deepen Moldova’s integration with the European Union (EU). Moreover, Chisinau further irritated the Kremlin, after Sandu’s reformist Action and Solidarity Party (PAS) won a healthy majority in Moldova’s general election, defeating Igor Dodon’s Socialist Party. Russia had never hesitated to issue cheap energy deals with Chisinau during Dodon’s incumbency between 2016 and 2020, but Moscow has recently shown greater hesitance to do so.
Russia’s political motivations are clear as Moldova’s new government has made European integration the country’s main foreign policy goal. Moscow has emphasized that a new gas contract deal was not issued to Moldova merely due to ‘exclusively commercial’ reasons; it denied the involvement of any political pressure. Nevertheless, it is widely believed that Moscow has been taking advantage of its energy exports for the sake of extracting political concessions. There are myriad instances when Moscow used its energy as a tool for ‘political blackmailing.’ In 2014, Moscow decided to drop pro-Western Ukraine’s energy deal agreed upon in the previous year due to the country’s debt to Gazprom.
No alternatives but Russia
Moldova is overdependent on Russian energy, which gives the advantage to the latter in price negotiations. Moldova’s national gas company Moldovagaz is controlled by Gazprom, and the country lacks alternatives for its energy supply. At the same time, approximately 80 per cent of the country’s electricity comes from a Russian-owned power plant in the breakaway region of Transnistria, over which the government in Chisinau has no control. These factors significantly boost Russian leverage over Moldova’s energy security.
At the same time, the Kremlin might have attempted to undermine Moldova’s energy sector reforms through the framework of the Third Energy Package and challenge the country’s Deep and Comprehensive Free Trade Agreement (DCFTA) with the European Union. It has been confirmed by members of the Moldovan legislature that Chisinau was asked to “put the free-trade agreement on the table” in order to secure a cheaper gas price. Moldova undertook the Third Energy Package in 2011 to unbundle MoldovaGaz, whose main shareholder is Gazprom, into three separate companies dealing with the purchase, transmission and distribution of gas in the country. Russia, not wishing to lose its influence in the Moldovan energy sector, has consistently opposed these measures.
Similarly, the DCFTA, which was signed by the EU and Moldova in 2014, has played an essential role in Moldova’s close linkages with the Union, and as a result, Moldova’s 70 per cent of export products, including electrical machinery and wine, have been sold to the European market. Apart from that, Moscow may have aimed to prompt disappointment in Moldovans towards the pro-EU incumbent party, which “failed to secure a cheap gas deal.” This would create momentum for the weakened pro-Russian Socialist Party to undermine the image of the government’s management of the energy crisis in the eyes of Moldovans and once again emerge as considerable political forces.
The Moldovan government tried to look for alternatives and has asked the EU for assistance. Romania, Ukraine, and Poland have been the first to deliver gas supplied to Chisinau. This has been the first time Moldova purchased gas from a state other than Russia. At the end of October, the President of the European Commission, Ursula von der Leyen, announced that the EU would grant Moldova 60 million EUR to purchase natural gas. Even though the assistance from the EU and Moldova’s neighbors and has been helpful, it could not fulfil the high demand for gas in the country.
An alternative that could substitute the Russian gas did not emerge either, and eventually, Moldova’s pro-western government was left with no option but to reach a new deal once again with Gazprom. At the beginning of November, the two sides managed to agree on “mutually beneficial terms” and Moldova secured a new five-year contract. Moldova has tried to diversify its energy, but it failed to set itself free from Russia’s monopoly. The recent energy crisis in Moldova is a clear manifestation that Russia’s still enjoys extensive energy leverage in the region and can direct it against pro-Western governments.
By Soso Dzamukashvili