In 2014, shortly before the Republic of Moldova signed its EU Association Agreement, nearly 99 percent of the electorate in the little-known, autonomous region of Gagauzia in southern Moldova voted in a referendum to reject closer links with Europe in favor of joining the Russian-led Eurasian Economic Union. Moldova’s central government first tried to block, and then declared unconstitutional, that referendum. Gagauzia’s separatist inclinations, weak economy, and deep ties with Moscow could pose as much of a threat to Chisinau’s hope of drawing closer to the European Union as the unresolved conflict in Transnistria.
CIPE’s Frozen Conflicts blog series looks at the current situation in seven breakaway regions of the former Soviet Union, with a particular focus on the economic dimension. To learn more about frozen conflicts and what can be done about them read CIPE’s Economic Reform Feature Service article on the subject.
The conflict between Ukraine and Russia has set in motion events that could have major implications for the unrecognized Moldovan breakaway region of Transnistria. Wedged between Ukraine and Moldova, two countries that have taken a Western turn in their foreign policy, Transnistria is distant from its backers in Moscow.
In May 2015, the Ukrainian parliament suspended all military co-operation with Russia, including a 1995 agreement giving Russia transit rights across Ukraine to reach Transnistria. Losing access via Ukraine means that Russia must route supplies to Transnistria by air through Moldova’s capital Chisinau, but the Moldovan government has been turning back suspected military personnel, and Tiraspol — Transnistria’s capital and the second largest city in Moldova — has an runway unsuitable for cargo flights from Russia.
The loss of direct Russian access has limited the flow of aid, one Transnistria’s most important revenue sources, and put the economic squeeze on a region already weakened by the poor economic situation in Russia. Industries in Transnistria, such as they are, have been shutting down or decreasing production. Moldova’s signing of a key trade deal with the European Union will increase the pressure on Transnistria’s economy. The net result could be to push Transnistria back toward its Moldovan parent state, in the process resolving one of the oldest post-Soviet frozen conflicts.
A national business agenda (NBA) is a powerful tool and platform for business people to engage in a proactive dialogue with policy-makers on issues affecting the private sector in a given country. Developing an NBA requires the private sector to collaborate to identify issues that constrain business activity, offer proposals and solutions to address the issues, and present them in an open and transparent manner to public officials. This private-sector led approach has been instrumental in advancing economic reform agendas in countries around the world.
When the public and private sectors work together to implement necessary economic reforms, entrepreneurs, businesses and citizens benefit from a more prosperous and vibrant democracy. Businesses possess the know-how and detailed knowledge of economic conditions, obstacles, and opportunities for growth, while governments have the means to pass business-friendly legislation. Public-private dialogue helps these two groups work together to arrive at effective policy solution.
Moldova’s National Business Agenda Network (NBA), comprised of more than 30 business associations and chambers of commerce from across the country, positioned itself as a key stakeholder in policymaking. With CIPE’s support, the Institute for Development and Social Initiatives (IDSI) institutionalized a culture of public-private dialogue where it did not exist before and encouraged greater transparency and inclusiveness in setting reform priorities in the areas of tax and customs law.
Find out how the Moldovan business community successfully built an advocacy coalition to work with the government on reform priorities in the recently-released case study “Public-Private Dialogue in Moldova”, part of a forthcoming case collection Strategies for Policy Reform.
Teodora Mihaylova is a Research Assistant at CIPE.
The private sector is a key actor in efforts to promote economic growth, reform the business climate and strengthen democratic policymaking worldwide. Dialogue is a key part of the Busan process, which recognizes that the for-profit private sector is a central driver of development and emphasizes the importance of inclusive dialogue for building a policy environment conducive to sustainable development.” Businesses possess the know-how of economic conditions, obstacles and opportunities for growth, while governments have the means to pass business-friendly legislation.
From a democratic point of view, a vibrant private contribution to dialogue expands participation in policymaking by creating space for civic engagement in governance, improves the quality of business representation and supplements the performance of democratic institutions.
Building upon its longstanding experience in the field, CIPE has been invited to participate in the 7th Annual Public Private Dialogue Global Workshop organized by the World Bank, BMZ-The German Federal Ministry for Economic Cooperation and Development, and GIZ in Frankfurt, Germany.
Senior Knowledge Manager Kim Bettcher will moderate a session on long term public private dialogue sustainability and the role of chambers of commerce and business associations. Director of Multiregional Programs Anna Nadgrodkiewicz will make a presentation on a new initiative between the CIPE, the World Bank Institute, and development partners on building an open and collaborative platform for public private dialogue resources.
CIPE has extensive experience in advancing policy dialogue around the world and supports market-oriented reform and private sector development by mobilizing representative business associations and strengthening their capacity to advocate for policy solutions. CIPE also invests in business association development that enables effective dialogue. Some regional success stories in public private dialogue are outlined in more detail below.
A public-private dialogue session with President Macky Sall in Senegal. CIPE partners organize such sessions in countries around the world.
In a webinar on July 11, Elias M. Dewah, former Executive Director of the Botswana Confederation of Commerce, Industry, and Manpower (BOCCIM), and other panelists shared prominent lessons from their experience with public-private dialogue initiatives in Africa and Eastern Europe and the Caucasus. Here are some of the highlights, addressed to private sector participants in advocacy.
- Be consistent and persistent in advocacy and dialogue to overcome government inertia.
- Remain independent from government but work with officials in an advocacy capacity.
- Be proactive and constructive. Don’t just criticize but offer alternative policy solutions.
- Come to the table with well-researched evidence. Link up with independent think tanks as needed.
- Be representative and inclusive of various sectors, not just a few elite businesses.
- Speak with one voice at all times.
- Move from issues involving transactions to systemic change.
- Make use of existing legal frameworks that provide for transparency and consultation.
- Find the most effective point of engagement in the legislative process – this could be in the drafting stage.
- Evaluate the impact. Look beyond dialogue processes at what is actually achieved.
On June 11 the World Bankreleased a report titled, “Moldova: Policy Priorities for Private Sector Development.” The report highlights business constraints and proposals for reform in five key areas: customs administration, tax administration, business regulation (licenses, authorizations, permits, and inspections), competition framework, and access to finance. These priorities are in line with the National Business Agenda (NBA) prepared by CIPE partners in Moldova. In fact, the World Bank report makes multiple references to the 2012-2013 NBA document, citing it as “reflecting the views of a broad range of private sector stakeholders.”
The NBA is not only a document. To prepare it, a network of over 30 business associations and chambers of commerce from across Moldova go through a well-structured process that includes building broad consensus on priorities, analyzing the legal framework for each issue, and developing joint proposals for reform. Using this methodology, the chambers and associations utilize the NBA framework to prepare for a constructive dialogue with government. CIPE has partnered with leading Moldovan think tank Institute for Development and Social Initiative (IDSI) to build the capacity of NBA members to jointly articulate not only the key barriers businesses face, but also concrete proposals to overcome them.
In addition, CIPE and IDSI have been providing assistance to the NBA member organizations to create a private sector platform. Today this platform is well-known among policymakers, the broader business community, and civil society as the NBA network. The member organizations are committed to developing a partnership with government through public-private dialogue. The goal is to work together on improving the economy, creating more jobs, and improving the climate for doing business. The voice of the NBA network is especially important in the reform process as it represents the views of the small and medium-sized domestic enterprises that comprise a majority of the Moldovan private companies.