PRIME MINISTER DISCUSSES MOLDOVAN-U.S.

C O N F I D E N T I A L SECTION 01 OF 02 CHISINAU 001016

SIPDIS

STATE FOR EUR/UMB

E.O. 12958: DECL: 10/08/2018
TAGS: PREL ECON EAID KDEM MD
SUBJECT: PRIME MINISTER DISCUSSES MOLDOVAN-U.S.
ISSUES WITH DAS MERKEL

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Classified By: Charge d'Affaires Kelly Keiderling
for reasons 1.4(b) and (d)


1. (C) Summary: During an October 8 meeting with
DAS David Merkel, Prime Minister Zinaida Greceanii
underlined the importance of moving forward on an
MCC Compact agreement as soon as possible. Merkel
discussed Moldova's trafficking in persons (TIP)
efforts; the Prime Minister vowed the GOM would
continue efforts to fight trafficking. Merkel
stressed the importance of open and transparent
elections in Moldova next year. Greceanii noted
that economic reforms had been successful but that
it would be more difficult to continue them before
an election. Merkel emphasized that the U.S.-
Moldovan relationship would remain strong regardless
of the U.S. electoral outcome. Greceanii stressed
that the GOM supported the 5-plus-2 format. At the
same time she said that the EU needed to accelerate
the adoption of a new mandate to integrate Moldova
into Europe. End summary.

Greceanii Wants to Sign the MCC Compact
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2. (C) Merkel opened his October 8 meeting with the
Prime Minister by stating that the MCC Compact was
very important to the USG. Greceanii noted that she
had been involved in the MCC Threshold and Compact
programs since the beginning and saw it as a
personal challenge to conclude a Compact agreement.
She urged that we sign the Compact by the end of the
current year or at the beginning of 2009. She knew
that the MCC maintained that feasibility studies
needed to be completed before the Compact could be
signed. She noted that previous Compact countries
had signed an agreement before completing
feasibility studies and asked whether MCC could sign
an agreement, perhaps on the roads portion, while
conducting feasibility studies on the
agricultural/irrigation portion. Greceanii argued
that the World Bank had already completed studies on
Moldovan roads; the MCC should not waste money on
redundant studies. She noted that the GOM had
publicized the Compact widely last year. Moldovans
around the country had asked her and other GOM
officials when the promised MCC projects would
begin. Greceanii noted that the lack of visible
progress on MCC Compact also reflected negatively on
the U.S.

Moldova to Continue Efforts on TIP
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3. (C) Merkel saluted the leadership the Prime
Minister had shown in addressing Moldova's TIP Tier
3 ranking. Moldova would likely be moved up to Tier
2 Watch List, Merkel said, though we were waiting
for a final decision from the White House.
Greceanii responded that this good news was not a
reason for Moldova to weaken its efforts on
combating trafficking in persons.

Open and Transparent Elections in 2009
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4. (C) Merkel emphasized that Moldova would benefit
greatly from representative, open and transparent
elections next year. Merkel also encouraged the GOM
to ensure the media were treated fairly and
respected during the campaign. The USG was
concerned about the process and not about the
outcome of the elections, Merkel noted. The Prime
Minister knew the GOM would be criticized during the
campaign. She asked the USG to seek out all sides
of the story. Greceanii stressed the importance for
Moldova of following a democratic path before and
during the elections.


5. (C) Merkel noted that the U.S. would experience
its own transition from November to January.
Regardless of the party in power, the U.S.-Moldova
relationship would continue to develop positively.

Economic Reforms and Investment Climate
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6. (C) The Prime Minister noted that the period
prior to elections was not the best time for a

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government to introduce reforms, but the government
would continue preparing reforms for the new
government. Merkel underlined that reform in
Moldova would attract investors. Greceanii
highlighted that the GOM had undertaken successful
reforms to liberalize the economy. Foreign direct
investment was higher this year and the GOM had
slowed down inflation. The budget deficit had been
reduced to zero for the current year.

Transnistria, European Union
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7. (C) Prime Minister Greceanii said she wanted to
reiterate President Voronin's words: a final
Transnistria settlement would have to take place in
the 5-plus-2 format. Merkel noted that the U.S. was
disappointed that the Transnistrians had not
participated or been encouraged to participate in
the 5-plus-2 talks in Vienna.


8. (C) Regarding the European Union, Merkel stated
that from his discussions in Brussels he knew the EU
recognized the need to speed up Moldovan integration
into the EU, especially following the Russian-
Georgian conflict. The Prime Minister responded
that Moldova recognized it needed to reform, but
progress had been made and Moldova wanted a new
agreement with the EU which would accelerate
Moldovan integration into the union.

Comment
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9. (C) Prime Minister Greceanii spoke frankly with
DAS Merkel of her frustrations with the delay in
signing an MCC Compact agreement. She has
personally invested much time and effort in Compact
elaboration and would like to close the deal before
her government ends. No doubt the government would
like to reap the benefits of its work on MCC
Threshold and Compact efforts before the 2009
elections. The GOM is looking for support from the
U.S. and EU to accelerate the country's integration
into Europe.

KEIDERLING