MOLDOVA: TROUBLE ON THE DANUBE

UNCLAS CHISINAU 000151

SIPDIS

SIPDIS

SENSITIVE

STATE FOR EUR/UMB

E.O. 12958: N/A
TAGS: ECON ETRD EWWT PGOV MD
SUBJECT: MOLDOVA: TROUBLE ON THE DANUBE


1. (SBU) SUMMARY: Progress at the port of Giurgiulesti, Moldova's
sole access to the Danube River, continues with the construction of
additional berths for unloading bulk cargo and grains, and a grain
storage facility. In 2007, the port's oil terminal opened,
receiving the first shipment of gasoline and diesel on September 12.
Future plans call for the development of an industrial park with
free economic zone status and an ethanol plant. The Moldovan
government (GOM) recently announced that it would build a passenger
terminal at the port. Although the port is of strategic importance
to Moldova, the foreign firm developing the port continues to
complain about governmental interference. END SUMMARY.


2. (SBU) Econoff recently met with Thomas Moser, Country Manager of
EASEUR Holding B.V., the developer and operator of the port. Moser
said construction at the port was progressing, but complained about
bureaucratic interference. When asked about future shipments of oil
products, Moser said delays in the construction of the company's own
network of gas stations had forced the suspension of imports. He
noted that only three out of the six gas stations built had received
permits to operate, and an additional station's construction was
suspended indefinitely. Moser blamed governmental interference,
obsolete building standards and regulations, corruption and
interference from competitors for the delays.


3. (SBU) Moser was very concerned that the tone in Chisinau had
changed. He explained that previously he would call on the Minister
of Economy and the Prime Minister to resolve issues involving
governmental interference and the issues would be addressed in a
reasonable manner. However, based on a recent letter from a
presidential economic advisor complaining about the lack of progress
at the port, Moser was worried that oversight of the port had moved
to the President's Office. He also believed that his competitors
from Russia and Romania (but especially Lukoil) were interested in
the port's oil terminal. He thought Lukoil wanted to prevent
construction of the ethanol plant, which would conflict with
Lukoil's plans to build a similar plant.


4. (SBU) Moser also noted that he had ceded 0.5 hectares of frontage
land on the Danube River to the GOM, which the government claimed it
needed for national security reasons. However, recently Prime
Minister Tarlev announced that a state-owned company would build a
passenger terminal on the land, which would be operational by
mid-2008. Moser believed the reason for the government's obtaining
the land was to facilitate travel for Moldovan citizens to Bulgaria
and on to the EU (bypassing Romania). However, speculation
continues about the urgency and necessity of this project.


5. (SBU) COMMENT: The case of EASEUR Holding and the port of
Giurgiulesti highlights the challenges of doing business in Moldova.
Moser is concerned that oversight of the port has moved to the
Presidency; he fears that the higher-level oversight will result in
his company's being squeezed out of the investment. Moser worries
that his Russian and Romanian competitors are colluding against him
with the support of some elements of the GOM. With an American
investor (with OPIC financing) building the port's grain terminal
and storage facility, we'll continue to monitor the situation,
engaging with the GOM if moves are made to take or alter property
rights at the port. END COMMENT.

Kirby