Reports. In-depth reports on the risk factors and threat implications of economic and financial statecraft.

Moldova is a highly vulnerable country in a number of respects, with:

• its internal political divisions (with a parliament that has teetered between factions of pro-Western and pro-Russian political parties);

• its profound economic challenges that are rooted in endemic corruption (marked most recently by the still unsolved theft of $1 billion from three local banks, amounting to over 10% of the countrys GDP); and

• the outsized influence of local oligarchs and grinding poverty that has persisted even after six years of ostensibly pro-European leadership from the capital city of Chiinu.

Matters are made worse (including from the perspective of Western investors that could otherwise help salvage the country), by the instability that comes along with Moldovas breakaway region of Transnistria and the autonomous territory of Gagauzia (including the risk of actual military conflict breaking out over their peculiar positions).

Moscows support for the countrys pro-Russian parties has taken a number of forms over the years, with their current support largely thrown behind the Socialist Party and Our Party, having lost faith in the efficiency and corruptibility of their previously favored PCRM. Despite the fact that these parties have not yet won a majority in the parliament, they have secured important local victories (such as their political control of the second largest city, Balti, a pro-Russian part of the country), positioned individual leaders (including influential oligarchs) for future success and been competitive enough in national elections to raise the prospect of winning outright in the future.

To advance its strategic agenda in Moldova, Russia has leveraged its position in Transnistria, including via the use of ostensibly commercial assets and control over prominent companies in the region and critical infrastructure. Further, nearly 170,000 residents of Transnistria possess Russian citizenship. Moldovas weak political and economic foundation and vulnerability to Russian economic, financial and energy supply pressure tactics has made it especially difficult for the country to push back against Russian influence and penetration efforts.

Excerpted Deals and Transactions:

• Moldovas state-owned gas company, Moldovagaz, has been held responsible by Gazprom for payment of gas supplies to Transnistria, despite its breakaway status largely under the thumb of Russian proxies. Gazprom has only one contract with Moldova (via Moldovagaz) that governs the supply of gas to the entire country (meaning Moldova proper and Transnistria). Moscows official position regarding Transnistrias accrued gas debt has been that, since Transnistria remains a part of Moldova, the debt is Moldovas responsibility. Some estimates attribute 86% of Moldovagazs $5 billion debt to Gazprom as the result of non-payments over this issue. In 2007 and 2010, Gazprom filed six lawsuits at the International Commercial Arbitration Court at the Chamber of Commerce of Russia related to debt repayment against Moldovagaz, for gas used largely by Transnistria.

• Russia has imposed punishing embargoes on Moldova that leverage the countrys dependence on Russia as a market for its most important goods, most notably its wine, but also its other agricultural products. In both 2006 and 2013, for example, punishing wine embargoes were imposed in response to the countrys closer alignment with the EU.

• Over half of Moldovans working abroad (an estimated 400,000) live in Russia, and their remittances constitute 10% to 15% of Moldovas GDP. (Remittances, overall, including those coming from other countries, comprise a staggering 26% of the countrys GDP). Moscow has targeted this income by more strictly enforcing its migrant laws and enforcing short-term visa overstays. Remittances have recently come into the crosshairs of those looking to use economic leverage as a form of asymmetric warfare.

• Roughly 58% of Moldovas power generation is located in Transnistria, including the Moldovan Thermal Power Plant (Kuchurgan), Moldovas only thermal power plant (exporting energy to both Moldova and Romania). In 2005, the plant became part of Russias Inter RAO UES, although only after a series of opaque transactions involving numerous offshore companies.

• Moldovagaz is Moldovas sole supplier of natural gas (which accounts for around 65% of energy consumption) and was privatized in 1999 as part of a debt-for-assets swap with Russia. Gazprom was awarded a controlling stake of 50% plus one share of Moldovagaz, a joint venture with the Moldovan government and the Industry Ministry of Transnistria, in return for writing off $47 million in energy arrears. In January 2006, Gazprom cut off natural gas supplies to Moldova in the midst of price negotiations and, in the aftermath, extracted Transnistrias management rights to Moldovagaz.

• On May 29, 2013, the Moldovan government announced that they had awarded a management contract for Chiinu International Airport to a Russian consortium, led by Khabarovsk-based Komaks (a company that operates the largest airport in the city of Khabarovsk, in Russias far east). The agreement stipulates that the consortium will operate the Chiinu airport for 49 years (until 2062). The decision was made on the final day in office of the then-acting government.

• Since its de facto independence, Transnistrias economy has been largely dependent on Russian aid. Indeed, economic and financial support from Moscow has been critical in staving off the economic collapse of the territory, with Russian aid accounting for roughly 70% of government revenue. Moscow has also provided significant subsidies to local businesses, invested in infrastructure and even paid pensions to Transnistrians (that the regional government was clearly not capable of providing). With Russias economy now hit with international sanctions, dropping oil prices, negative growth and accelerating capital flight, the economic situation in Transnistria appears to have worsened considerably. In the first half of 2015, exports fell by 23.4%, cutting Transnistrias budget revenues by 45%.