THE BELL WEEKLY: Moldova’s pro-Europe president squeaks through

Hello. This week our main story is Moldova’s pro-EU president securing a slim victory in an election closely followed in Moscow. We also look at whether Russia’s economic statistics can be trusted.

Narrow victory for Moldova’s pro-European president

A week after Georgia held crunch parliamentary elections, another former Soviet republic with EU ambitions went to the polls, as Moldovans voted in a presidential contest. The situation in Moldova, which was recently granted EU candidate states, was the reverse of that in Georgia — pro-EU president Maia Sandu was looking to hold onto power in the face of a strong pro-Russian opposition. She emerged victorious, though the results were a closer battle than most anticipated, highlighting divisions across the country.

• Incumbent Maia Sandu managed to hold onto power in the second round of Moldova’s presidential election. But her victory was slim — securing 55% against 45% for the pro-Russian opposition candidate, Alexandru Stoianoglo. Russian propagandists were delighted to reportthat Sandu’s victory was based on votes from the Moldovan diaspora abroad — Stoianoglo received 51% of votes cast inside the country.
• Even just a few months ago, nobody would have expected such a close race in Moldova. Sandu was clearly ahead in the polls (1, 2), with twice as many supporters as her closest rival. Stoianoglo was polling just 1%. Experts suggested that Sandu might win the election in the first round. Confident of her position, the president simultaneously called a referendum on Moldova’s proposed EU membership. Securing candidate status in June 2022, alongside Ukraine, was the highlight of Sandu’s term in office and she sought to capitalize on the issue in a simultaneous vote that was supposed to boost her standing. 
• But the results of both votes were disappointing. Sandu failed to win in the first round, securing 42% against 26% for Stoianoglo, the former prosecutor general who consolidated the protest vote. The EU referendum almost ended in defeat, with just 50.3% voting in favor. 
• Stoianoglo cannot be pigeonholed as a simple pro-Russia candidate. In his words, at least, he talks of European integration combined with the need for pragmatic relations with Moscow (a similar message to that touted by Georgia’s ruling party). As a result he is a far more comfortable partner for the Kremlin than the openly anti-Russian Sandu. 
• Although Sandu remains in office, the results are a blow to her and the EU. Sandu is the closest ally Brussels has had in Moldova in the three decades since the collapse of the Soviet Union. And her fight for power is not over. The country is a parliamentary republic, and Sandu’s Party of Action and Solidarity will face another tough contest in parliamentary elections scheduled for next year.

Why the world should care

The big question posed by the votes — the first since Russia’s invasion of Ukraine — is whether it reflects a decline of Russian influence in Moldova. Among the three former Soviet republics seeking EU membership, Moldova finds itself between an eager Ukraine and Georgia currently suspended from the accession process due to the passage of a Russian-inspired law on foreign agents. Moscow is working hard to undermine the position of Moldova’s pro-European forces ahead of the 2025 election. These results show a pro-European government could easily be pushed out of office.

Can we trust Russian economic statistics?

Since the start of the war, the Russian authorities have classified heaps of important statistical and economic data. For the third year in a row, Moscow is not publishing figures on imports, exports, foreign trade, gold and foreign exchange reserves, or oil production. But can the data that Moscow still churns out be trusted? 

• The clampdown on information about the Russian economy remains in full force, with authorities having removed almost 600 data sets from the sites of government agencies since February 2022. Historical data sets are also disappearing, including information on officials' salaries, government procurement and migration, to name a few.
• In these circumstances, many commentators are inclined to question the reliability of that which remains. For example, independent Russian researchers doubt the quality of the data on poverty levels and the number of Russians that meet the “subsistence minimum,” a gauge of the lowest level of income required to purchase basic necessities. The Stockholm Institute of Economics, which produced a report into the current state of the Russian economy at the request of the Swedish authorities, accused Russia of widespread manipulation of the data, suggesting that GDP did not, as reported, grow by 3.6% in 2023 but fell by anything from -1.7% to -10.8%.
• The Bank of Finland’s Institute of Developing Economies (BOFIT) has now published its own research into the reliability of Russian statistics. Senior economist Heli Simola analyzed Russian economic data published before and after the invasion and concluded that, despite some oddities, there is no evidence of widespread manipulation.
• Simola analyzed 31 data sets, from salary dynamics and corporate profits to the cost of Urals oil and federal budget expenditures. She checked them for compliance with Benford’s law, which has long been used successfully not only to identify manipulations in macroeconomicdata, but also in bookkeeping and trade. She also checked the relationships between economic variables (for example, income/consumption, and investment/construction) as well as comparing Russian trade figures with those published by the corresponding countries.
• The analysis found that Rosstat’s information was and remains fairly accurate. But Simola noted the uncertainty that emerged after the invasion of Ukraine in the monthly and quarterly budget data publishedby the finance ministry and the Federal Treasury. These stats ceased to follow Benford’s Law and also lost their previous relationship with other economic indicators. This might prompt questions, but it is too early to draw reliable conclusions. The war and the massive growth of state military spending could cause statistical discrepancies that have nothing to do with manipulation.

Why the world should care

The Russian government is still savvy enough to realize that without some reliable statistics, a basic market economy cannot function. This means third-party researchers can still rely, to some extent, on Russian data and analyze it to assess the state of the economy — something we do every week in our special economic newsletter.