Venice Commission, mixed-member electoral system and European assistance

The Venice Commission’s opinion about the Democrats’ and Socialists’ proposal to introduce the mixed-member electoral system becomes a crucial benchmark for the allotment of macro-financial assistance to Moldova by the EU.

The intervention of the EU-Council of Europe duo in the case of the mixed-member system creates at least three important precedents for Moldova and the whole European neighborhood. First of all, the European Union shows flexibility and ingeniousness by imposing for the first time political preconditions for offering macro-financial assistance. Secondly, the EU transforms the recommendations of the Council of Europe/Venice Commission into preconditions for disbursing the macro-financial assistance. Moreover, the EU maintains the political precondition among the criteria for assessing the progress throughout the assistance allotment period. Last but not least, a precedent is set as regards the real impact that the European Parliament can have on the modification of the “contractual terms” of the macro-financial assistance that the European Commission proposes to the applicant third countries. This case highlights that the European legislature also has the capacity to promote the interests of the people from the countries of its neighborhood, including Moldova.

 

Chronology of decisions on EU macro-financial assistance

January 13, 2017 European Commission proposed €100 million in macro-financial assistance   (€60m in loans and €40m in the form of grants). The proposal was made in response to the Government of Moldova’s request for assistance and as a result of the financing program agreed with the IMF (November 2016), to the value of US$ 178.7 million for a three-year period.
February-March 2017 Council of the EU (representatives of national governments) had examined the Commission’s proposal.
April 12, 2017 Ambassadors of EU countries or the Permanent Representatives Committee (COREPER) agreed the negotiating stance on macro-financial assistance for Moldova.
May 4, 2017 Committee on International Trade (INTA) of the European Parliament amended the proposed decision on macro-financial assistance.
June 6, 2017 European Commission, European Parliament and the Council of the EU discussed the subject in a “trialog” (informal meeting) that forms part of the co-decision-making process at European level. As a result of the trialog, the three sides formulated two documents:

1. Proposal for a decision of the European Parliament and of the Council of the EU providing macro-financial assistance to the Republic of Moldova (general conditions on the provision of assistance);
2. Joint statement of the three institutions for publication in the Official Journal of the EU together with the own decision (political precondition).

June 15, 2017 EU ambassadors endorsed the agreement reached with the European Parliament on macro-financial assistance for the Republic of Moldova.
To follow European Parliament and Council of EU are to adopt the decision on the assistance without further discussion. Council of EU (national governments of EU) will adopt the decision with a qualified majority, which is at least 55% of the member states that represent at least 65% of the population of the EU.
To follow Defining the memorandum of understanding on macro-financial assistance (the negotiations initiated in April), which will reflect the conditions agreed in the trialog, including as regards the political precondition.

What is the position of the Venice Commission?

The first echoes of the opinion of the Venice Commission (Council of Europe) are discouraging for the authors of the proposal to introduce the mixed-member electoral system – Democratic Party (PDM) and Party of Socialists. The Commission critically assesses both the intention to introduce the mixed-member system and that to expand the powers of the President (Council of the EU, June 2017). The two aspects are contained in the draft law that was already adopted in the first reading in an unexpected and nontransparent way, by 74 votes of the Democrats, Socialists and unaffiliated MPs who oscillate around the PDM (IPN, May 2017).

First of all, the Commission comes with conceptual criticism, concluding that the proposed reform cannot be considered as having been adopted by broad consensus, without specifying yet if it is about consensus reached in Parliament or in society. On the other hand, the draft law to introduce the mixed-member system in the first reading was voted by 74 MPs of the 101, which is over 70% of the legislature’s composition. On the other hand, polls show a fully non-uniform image inside the public opinion. According to the recent Public Opinion Barometer, 37% of the respondents plead for keeping the party-list electoral system, 29% for the uninominal voting system, while 23% for the mixed-member system (IPP, April 2017). The Democrats and Socialists make reference to other polls according to which most of the citizens would support the mixed-member system. The opponents of this idea – the extra-parliamentary opposition and representatives of civil society who actively monitor the authorities – consider the Democrats misinform the public opinion and force the budget-funded employees to support the mixed-member system.

The Commission also considers there is a risk that constituency members of parliament would be vulnerable to being influenced by business interests, avoiding yet to make reference to the phenomenon of “state capture” (IPN, May 2017). In fact, even if indirectly, the Commission alludes to the widely-spread political corruption in Moldova to which the mixed-member electoral system could contribute even more.

The second set of criticism refers to technical aspects of the mixed-member electoral system, including the vague criteria for establishing single-mandate constituencies by the Central Election Commission and the fact that detailed and comprehensive criteria for the establishment of constituencies for Transnistria and for citizens abroad are not stipulated, and proposed changes are unlikely to enhance the representation of women and minorities in the Parliament.

The Democrats announced on a number of occasions that they intend to improve the draft law, including as a result of broad consultations. The technical aspects are exactly those things on which the government is ready to concentrate. The extra-parliamentary opposition and the active representatives of civil society fully oppose yet the idea of the mixed-member proportional voting, which favors both the Democrats and the Socialists, who have both administrative and/or private resources, media outlets with national coverage and considerable subsidies from the state budget, calculated according to the results achieved in the elections in 2014 and 2015 (Promolex, May 2017).

The third set of criticism is leveled at the proposal to expand presidential powers. The Commission says the provision of additional powers to dissolve Parliament to the office of the President could be interpreted as creating excessive executive power to use dissolution as a tool for “party politics,” under the current parliamentary regime. Finally, the Commission concluded that the proposal opposes to the broad potentially discretionary power of Parliament, an equally broad discretionary power of the President, which would open the way to institutional conflicts.

However, public surveys show an explosion of sympathies with President Igor Dodon. Using this favorable context, the President signed a decree (March 2017) to initiate a consultative referendum for this autumn on the expansion of presidential powers, transformation of the money embezzled from the banking system into state debt, reduction of the number of MPs to 71 and studying of the History of Moldova course. The Democrats could rather abandon those provisions about the powers of the President included in the bill on the mixed-member system so as to partially satisfy the recommendations of the Commission, even if they could lose the support of the Socialist MPs in the final reading.

Macro-financial assistance in three tranches and based on three conditions 

Under the proposed decision on the provision of macro-financial assistance (Council of the EU, June 2017), the €100 million will be allocated in three trances with an interval of at least three months between each other. The given assistance can be provided in parallel with the assistance envisioned through the European Neighborhood Instrument. The latter can amount to €610-746 million in indicative allocations planned for 2014-2020, but would be transferred depending on necessities and commitment to reform.

The macro-financial assistance will be disbursed based on the memorandum of understanding that is to be negotiated at the next stage. The memorandum will contain specific conditions whose implementation will influence the decision on the disbursement of tranches. The assistance provided in loans (€60m) is to be repaid within 15 years, which is until 2032.

The first tranche of the macro-financial assistance should be disbursed in two years and six months of the coming into force of the memorandum of understanding between Moldova and the EU.

There are three groups of conditions without which the macro-financial assistance cannot be allocated. These are very diverse and interdependent. Under the arrangements between the European Parliament and the Council of the EU, only their simultaneous fulfillment will enable to initiate the assistance and to subsequently continue it.

The first condition is actually a political precondition and is that the Republic of Moldova respects effective democratic mechanisms, including a multi-party parliamentary system. It would have to respect the rule of law and guarantee respect for human rights. The European Commission and the European External Action Service would regularly monitor the fulfillment of these preconditions and objectives, both at the initial stage and throughout the macro-financial assistance allotment period.

To strengthen the political precondition, the three European institutions signed a joint statement that was agreed as a result of the trialog of June 6, 2017. The statement makes reference to the proposal to change the electoral system, the importance of functional democratic mechanisms and the appropriate fulfillment of the recommendations of the relevant foreign partners, in particular the Venice Commission and OSCE/ODIHR, by the Moldovan authorities.

The second condition is to ensure satisfactory implementation of the program with the IMF, which contains important structural reforms, mainly in the financial sector. This way the EU wants to make sure that Moldova is fully committed to do the reforms monitored by the IMF.

The third condition consists in the implementation of the Moldova-EU memorandum of understanding on macro-financial assistance, especially as regards the economic policies.

Defects of political precondition

The idea of a political precondition is essential for exerting effective pressure on the Democrats, who want to use the mixed-member electoral systems to strengthen their positions in the 2018 elections. Nevertheless, the way in which the precondition is formulated in the statement of the three European institutions is fragile because it is very interpretable.

More exactly, the precondition provides that the European Commission and the European External Action Service will devote increased attention to the way in which the Moldovan authorities follow the recommendations of the foreign partners, especially the Venice Commission. Based on such a formulation, the Democrats could implement 70-90% of the recommendations of the Venice Commission, as regards the technical aspects and the presidential powers, without giving up the idea of introducing the mixed-member system.

Suspension of assistance is anyway possible 

The improper fulfillment of the commitments made to the EU can inevitably lead to the suspension or even annulment of the macro-financial assistance. There are a series of circumstances in which Brussels could decide to suspend the assistance.

In general, the assistance can be frozen temporarily or can be definitively annulled if the political precondition about the democratic mechanisms, the objectives of the memorandum of understanding or the principles of the Moldova – EU Association Agreement are not respected by Moldova.

So, if the Moldovan authorities fail to implement the conditions for obtaining the assistance, including the rather fragile precondition about the implementation of the Venice Commission’s recommendations, the macro-financial assistance could be at any moment easily suspended or even cut. The year 2015 showed that the EU can easily freeze its assistance. That’s why the Democrats will make considerable effort not to remain without European assistance during 2017-2018.

Instead of conclusion…

The change in the electoral system and introduction of the mixed-member electoral system are an objective that the Democrats do not intend to give up because this ensures their longevity and political immunity in the post-2018 period. There are sufficient indexes showing that the PDM will try to maximally adjust the draft law on the mixed-member electoral system so as to satisfy at least partially the requests of the Venice Commission and, respectively, of the EU. The probability that the mixed-member system will be abandoned its very low.

When the decision on the provision of macro-financial assistance is adopted, the European Parliament will not be able to impose new conditions. In fact, the decision on assistance could be adopted by the Council of the EU with a qualified majority and the negotiation of the memorandum of understanding could be initiated meanwhile. Theoretically, even if the memorandum is ratified, the EU can wait for two years before disbursing the first tranche of the macro-financial assistance, which is until 2019.

The peaceful protests and other advocacy activities are the most powerful form of blocking the introduction of mixed-member electoral system. The extra-parliamentary opposition and the active representatives of civil society can succeed if they influence the Democrats to make mistakes and accumulate criticism from the European Commission and the European Service. This way, some of the European financial resources could be delayed (€100 million in assistance) and the Democrats would lose the already low credibility and this can prevent them from restoring the public support before the elections of 2018.

Ultimately, for the PDM both the mixed-member system and the image with which they will enter the next elections are important. For its part, their image depends on the access to more foreign assistance and on the transfer of positive image from the West.

This article was initially published on IPN News Agency on 19 June 2017

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