October 7, 1999 - Mark Horton: Article in FLUX Newspaper

LACK OF A NATIONAL CONSENSUS CONTINUES TO GENERATE MANY PROBLEMS AND DOCTRINAIRE MISUNDERSTANDINGS

Mark Horton was born in 1965, in state of Michigan, USA. He had studied at the University of Colorado, after that worked in a private consultant company in energetic field. He received the university degree at the University of Harvard. Immediately after graduation, in 1992, started to work for International Monetary Fund. He is being married for 9 years and has two children of 5 and 3 years old.

As a permanent representative of IMF, he worked at the Department for African countries, in Kenya, than he was transferred to Department II for European Countries, that deals with former SU countries. He had been working in Uzbekistan for 18 months, then in Kazakhstan, and during last three years - in the Republic of Moldova. His next country will be Lithuania.

In 1985 he started to learn Russian, but as he himself recognised, “it is a big challenge”.

I came with a higher optimism than I am leaving with  

Mr. Mark Horton, our “Coffee” shall be published on the last day of your stay in Moldova. How were those three years spent as resident representative of IMF in Moldova, especially from the point of view of some opportunities  that Moldova had?

This is a good question, and during last week I had several occasions to refer to this aspects. I came to Moldova with a higher optimism than I am leaving with. I was almost convinced that thinks can faster change to better. For me, Republic of Moldova seemed to be like Baltic Countries. Even if I have been told, for several times, that such analogy is not valid for these countries, that the mentality is so different and things are much more complex and difficult here, for a long time I refused to accept this idea.

Actually, Americans do not believe in the concept of mentalities, they are convinced that if a mentality is not functional, then it needs to be replaced. It is only now that I understand what those people really meant. I am not trying to say that I became more pessimistic, but I have to admit that mentality is an important issue that needs to be taken into account when talking about the speed and level of implementation of reforms.

During last years, Moldova has been influenced by a set of factors, first of all, the external ones that play an important role in country’s development. I would even say that the progress of the Republic is determined by the situation of neighbouring countries. 

Another factor is lack of national consensus that continues to generate further problems and doctrinaire misunderstandings that should have already been solved about 6-7 years ago.  

What are you concretely referring to? 

For example, Transnistria. The position of the Government in this aspect is still unclear. We are lucky that this conflict is a “peaceful” one and does not constitute a direct danger.  

There are other situations, for example lack of a clearly defined strategy and a national consensus makes things to be unstable and less predictable.  

Another example is lack of transparency in promoting the integration policy. Its is still unclear whether Moldova wants to join Europe or CIS. 

Who can advice Moldova in joining either Europe or CIS? 

The population has to take such a decision. Maybe it is not that easy now, when we have a new democracy that is not formatted yet and easy to manipulate, but still, its the local population that decides its future, and it can be done through concrete steps. The civil population has to find ways to impose its own opinion.  

I don’t want to be too direct in answering the second part of the question, important is not my opinion, but the opinion of the people. Still, I think it is obvious that, on one side, we talk about a modern and stable partner that represent a good source of investments and on,  the other side, financial and political poverty and instability.  

In my opinion, Moldova has to join a reunion that will help it to increase the living standard. It would be much easier if Romania accelerates the process in this direction, or, maybe, Moldova doesn’t have to wait for it.  

I insist again that it is the civil society that will  think upon this issues and make the politicians join one or another part. This is how you create the national consensus. 

Please make an assessment of present relationship between Moldova and IMF. 

Haw ironic it might seem, but it is the best for the last three years. During this year, Moldova benefited two credit instalments from the IMF and the results we got were good by the end of September. In order to analyse this results, a mission of the IMF shall arrive by the end of October. In my opinion, the government did the best to fulfil the conditions under the agreement signed with IMF and, I think, the Parliament supports us too. As a result of negotiation with the team of the Republic of Moldova held in Washington, representatives of the IMF, responsible for programs with Moldova, decided to support, under certain conditions, the increase of budget deficit stipulated in the Law of Budget for 1999 from 2% to 5%. The major condition for this instalment is to pay off some of Moldova’s debts to Russia and Romania. This is the subject of present negotiations between the Republic of Moldova and governments of the other two countries. If this repayment shall not take place or the Moldovan government will use this money with other destinations, than IMF will not accept the increase of budget deficit for 1999. This will certainly make the negotiation of financing the budget deficit for 2000 more difficult.  

You have mentioned that you are supported by the Parliament. Could you make a comparison between the old and present Parliament? 

I came to Moldova in 1996 and I had been working with the old Parliament for a year and a half.

As I already mentioned, there is more understanding and a better co-ordination between the actual Parliament and Government. They feel and approach the problems Moldova faces more realistically. The proportion of conservatory forces in the actual Parliament is different from the old one and, in the best majority of cases, the reformatory initiatives have been supported. Unfortunately, the situation today is worse than it used to be in 1996 and the results of the efforts can be hardly seen.  

The strategy of the present Government is more evident and coherent, its members being very competent and strong persons. For example, the prime-minister does an excellent job.  

What are your daily sources of information and how independent do you find the press of Moldova? 

My informational sources are, first of all, phone conversations and meetings. We also collect a lot of data about the events that take place in the republic, I meet representatives of diplomatic communities, investors and I try to get in touch with simple people in order to find out their points of view. I read FLUX, Bassa-press, Infotag, “Ekonomiceskoe obozrenie”, “Logos-press”. Regarding the independent press, it is very difficult question to answer.  

Then, the following question - how do you appreciate the independence of press? 

For example, I think that your newspaper is quite rowdy, in a good sense of the word, in such a way it draws attention upon many existing problems of the society. This is a positive thing and shows a kind of independence of your newspaper, despite discussions like ”who does FLUX belong to?”. In my opinion, you are a publication that adds some spices in the local mass-media.

The way Americans perceive the independence of press is a bit different than you do. In USA, mass-media are like “watch dogs” that, as soon as they trace a problem, force the political powers towards its solving.  

In Moldova, in many cases, you stop at problem identification stage and on drawing attention upon it. At the same time I realise that the situation could have been worse, so I can congratulate you for the possibility to express your opinion. 

However, the press has to focus more upon the social aspect and create debates on problems of major interest, one of them being the national consensus.  

In what way the lack of national consensus and irresolution regarding the integration policy affects the dialogue between the Republic of Moldova and IMF? 

For IMF this means that promotion of reforms in Moldova is inconsistent. This is actually the biggest problem. During three years of my stay, there have been several periods of intensive activity when hundreds of laws have been adopted in an extremely short period of time in order to satisfy the requirements - June 1997, November - December 1998 and this summer. But this periods alternate with the passive periods or of political fights. It, implicitly, means that the economic policy is not always logic and consistent. This is how we see this lack of consensus that, from time to time, affects the relationship with IMF. 

It is known that money can corrupt even the politicians. Several months ago you made some declarations regarding corruption.  Did you also feel the breath of our political sharks at your back?  

I tried not to make any political declarations touching spicy issues, or giving concrete names. All I wanted to do is to outline a problem that does not allow Moldova to develop economically. It might seem strange to you, but my partners thanked me for treating the problem so openly. The corruption problem politicises itself really fast, so I think it is good that it has been revealed by an outsider.  

Frankly speaking, looking at the rows and roomers around the institution that I represent in Russia, I am glad I made the declaration at that time. Being donors of the Republic of Moldova, we should be very receptive to problems of corruption. We cannot be completely satisfied with our job as long as this scourge persists.  

However, I am satisfied with the way the NBM administrated the funds allotted by IMF.  If I were asked who impressed me most of all from the people I collaborated with, I would mention Mr. Talmaci. Credits offered to Moldova had a very concrete purpose - stabilisation of the national currency and diminution of the inflation rate, and I think we succeeded to achieve the objectives we had settled at the beginning. 

Could you please refer to concrete cases of corruption that you have met? 

It is very difficult to treat this subject concretely. Just like everybody else, I have read the report of the Audit Commission. I have big question marks regarding programs of credit guarantee and here I especially refer to energetic sector and relations with energy providers. Another kind of question would be how did one manage to control and monopolise the economy in such a way as to make her look unattractive for any foreign and local investments. I don’t know whether we can call it a form of corruption, but if you remember, in February, we used the term “interests of a group”. We can say that, in this case, we have a clear case of interest of a group.  

For IMF it is important that both corruption and group interests make reforms to have small impacts.   

What do you think, against all reasons, is there an international lobby for Moldova? 

Unfortunately, I do not think anything like that exists. May be I will join or create one because Moldova needs a lobby. How strange it might sound, but 99.9% of the USA population did not even here about Moldova. Americans are ignorant, at least when it comes to geography.  

You mentioned mentality as a factor that hinders the economic relaunching of Moldova. Did you mean the soviet type of mentality? 

An aspect that every newcomer notices is the passiveness of the population in fighting problems. I don’t mean that the whole society is passive, there are certain groups that are rather active, for example nomenclature or mafia. This problem is the result of the soviet period, and, maybe, even of the last 500 years. 

But I still think that mentality can be changed.  

You are very well known as a representative of an international body and one that makes dour affirmations. Have you ever been reprimanded for your affirmations? Is it a result of personal courage or policy of IMF? Aren’t you afraid of consequences? 

Yes, I am.

Usually, after such interviews I ask myself why did I say this or that?..

IMF focuses mostly on such problems as governmental transparency that obliges one to talk about corruption or group interest. Maybe one does not have to be that open-hearted every time, but, I think, every time he has to adjust his message to concrete circumstances.

Personally, I am very committed to my job, that is why it affects me when some people declare that eight years of collaboration with financial bodies did not show any positive results. I did not tell you that my father was a priest and in my family I have been talked a lot about compassion. This is why it is so difficult for me to stay aside and not to comment upon some problems.  

I tried to be careful when making declarations, and, even if they were dour and maybe too open, I tried not to point out concrete people, but to talk only about the problem. I am glad that the situation in the  republic allows me to speak out, and I am glad that they didn’t refuse me the visa.  

Seriously speaking, I think that there is a good relationship between Moldova and IMF. We granted a big amount of money that has to be reimbursed and, working here, you must be open, sincere and ready to defend your institution.  

Do you still support your previous declaration regarding the referendum? 

I do not want to come back to this subject. I have been “registered” for making some declarations and there were some concerns in this direction.

Actually, there is a tendency in Chisinau to repeat yourself for several times and I do not want to join this category. In February, when I talked about corruption, for about two weeks I had been chanted by journalists to talk to them about it. I used to recommend them to read that specific newspaper.  

In the situation in which the Republic of Moldova missed the opportunity of shock therapy in its economy, what would be the fastest way to overcome the crisis, because, so far, our transition period lasts 10 years? 

My opinion is that the most important thing is to persuade foreign and local investors to invest money into the  country. During last several years, a degradation of the infrastructure occurred, a fact that does not favour investments at all. As a result, a decrease in production took place, a fact that makes collection of taxes more difficult. Everything gets worse due to bad administration of political issues, bureaucracy and other constrains.  

In order to attract investments, you have to convince the investors that the country has a clearly defined policy for next 10-20 years. Here we again tackle the necessity of a national consensus. As a result, it is easier to talk about activity of investment attraction than doing it.  

Moreover, we are living in a world of competition. An investment can be done not only in an unknown country as Moldova is, but also in Romania, Hungary, Poland.  

However, the experience of some family friends that left to USA and managed, in a relatively short time, to assert themselves by launching  business that could be successful here, makes me feel optimistic about the perspectives of this people.  You need to adjust some aspects and this region will revive and flourish.  

What danger might represent the exode of intellectual potentiality from Moldova? 

All those present here can tell more about this. They all have friends or relatives that left for Israel, Canada, USA and other countries. What attracts one in Moldova is a talented and capable population, and cheap labour force. The average salary in the Republic of Moldova is of 20$ per month. People get angry and say that they are being exploited when the foreign investors pay them only 40$ per month, but I think it is a better alternative than being unemployed. Once the productivity will raise, the wages will raise too, not with 2%, but with 15-20% per annum, as it happened in Baltic countries or in Central Europe.  

The intellectual potentiality exode represents, of course, a big danger for Moldova. When the process becomes a general issue, than the  vitality, on the national level, is lost. Almost the whole young potentiality from the Moldovan villages left for Chisinau, Moscow or Romania, or even to more far-off countries to find a job.  

Moldova is a poor country also because of the people that emigrate.  

This is a problem that needs solving at the governmental level by building up a sustainable economy and creating good conditions, and, as a consequence, people wouldn’t leave. This situation, along with many others, determines us to press the government in promoting a policy that would determine the growth in every field of activity.  

How do you appreciate the acute crisis that Moldovan politicians are facing today? 

Here I come again to the idea of national consensus. My answer comes out of that desideratum. I think that the actual crisis is just a continuation of a set of previous crisis, and this fact does not allow reaching the national consensus, thus stopping the development of the country as a whole.   

The politicians have to ask themselves whether Moldova can afford the luxury of permanent crisis or maybe it is better to have a stronger and more stable government.  

What are Moldova’s chances to pay its external debts and what will be the consequences of declaring the state insolvent? 

It is true that Moldova has big external debts. A positive aspect is that Moldova has only few big creditors, and 90% of debts have non-commercial basis. This creditors are long term partners of Moldova: IMF, WB, EU, USA government, BERD, Russian government, “Gasprom”. They proved to have a lot of patience in dealing with Moldova. As a conclusion the burden of external  debts  is very big, but it can be controlled through establishing partnership relations with the creditors, and in such a case I don’t think that Moldova will ever be declared insolvent.  

What are the strongest impressions of your stay in Moldova? 

There are things that impressed me profoundly, first of all it was the open-heartiness and seriousness of local people. Living in Moldova was different than living in Kazahstan, Uzbekistan and even Romania and Ukraine. I do not refer to material things, it is about a certain local colour, specific national features that only an outsider can track them out.  

This type of open-heartiness and seriousness that I met during my collaboration with local people, is unique for this part of the world. It reflects a culture that if bottled, could be successfully marketed, even more successfully than Cricova champagne. This is what I will always remember.  

I have been living here for 3 years speaking Russian, and I have never felt well in this hypostasis. But everybody was so kind and nice to me, that I didn’t have to learn Romanian. However, I read FLUX, watch “Mesager” in Romanian and I understand almost everything.  

 Was there anything, during your stay in Moldova, that you consider being a success? 

I feel really well when I think of those interventions I made during my stay, also mentioned today. I find them constructive and I hope that in this way I have managed to contribute to better understanding of IMF’s role in Moldova.  

I would like to think that local people will remember me as a person that tried to do something, a person that cared about Moldova and its people, a person that did not try to become rich or get drunken, but had a serious attitude towards his job.

Do you intend to come back?  

I made here a lot of good friends, and, even its a road from nowhere to nowhere, I would like to come back, not tomorrow or on Wednesday, but some time, in order to see what has changed. One thing is certain, I will follow every event that takes place here.  

You will read our “Coffee” only on the aeroplane. What is you message for those that stay here? 

In USA, it is usually written on the gravestone: “He tried”. That’s all.