bne IntelliNews -

The Liberal Democratic Party of Moldova (PLDM) and the Democratic Party of Moldova (PDM) have agreed to form a minority government, which will rule with support from the Moldovan Communist Party (PCRM). The two parties back Moldova's application to join the European Union but they will be constrained by their reliance on the pro-Russian Communist party. Attempts to reach an agreement with the pro-European Liberal Party (PL), which would have given the coalition a majority, failed after six weeks of negotiations since the general election.

The PLDM and PDM announced the so-called Alliance for European Moldova on January 23 and voted in Andrian Candu (PDM) as parliament speaker, with backing from PCRM deputies. The coalition will publish its strategy on January 26 and the government is expected to be formed within two weeks.

Iurie Leanca, prime minister until the November 30 elections and currently acting prime minister, is unlikely to retain his position. The PCRM has already said that it is ready to support a minority PLDM-PDM cabinet, but not one headed by Leanca, most likely because of Leanca’s firm pro-EU stance.

In June 2014, Leanca’s government signed an Association Agreement and Deep and Comprehensive Free Trade Agreement with the EU. Leanca has also indicated he wants to apply for EU membership in 2015, paving the way for Moldova to enter the bloc by 2020.

There is now speculation that the PLDM will appoint Natalia Gherman-Snegur, the daughter of Moldova’s first president Mircea Snegur, as prime minister. However, there is still the possibility of a last minute renegotiation of the coalition to include the pro-European Liberal Party (PL), which could enable  Leanca to remain in office.

The PL had been in talks with the other pro-European parties for six weeks following the elections but the three parties failed to reach a coalition deal. The PL had insisted on faster European integration and strict anti-corruption targets, as well as for a foreign head prosecutor to be appointed.

A government comprising Moldova’s three main pro-European parties would have held only a fragile majority within the parliament. The PLDM-PDM coalition holds only 42 of Parliament’s 101 seats. However, with the backing of the parliament’s largest party, the PCRM, it will hold a substantial majority.

PDM President Marian Lupu has stressed that the PCRM will not be part of the government, in an attempt to allay fears that Moldova’s progress towards the EU will be halted. However the PCRM will receive some, as yet unspecified, positions in the public administration.

Moldova’s new parliament speaker, Candu, is a former economy minister and close ally of the PDM’s financial backer and deputy-president Vladimir Plahotniuc, who is also his godfather. According to a 2010 estimate from Ukrainian daily Delo, Plahotniuc had a fortune of between $300mn and $1bn, though its sources are unclear.

The November 30 general election was widely viewed as critical to deciding whether Moldova’s future orientation lay towards the EU or to Russia. Two pro-Russian parties, the Socialist Party and Patria, wanted the Association Agreement to be scrapped altogether, while the PCRM took a softer stance, calling for the agreement to be amended.

The Moldovan population remains divided over whether Chisinau should push ahead towards EU entry or remain within the Russian sphere of influence. Moldova’s economy is already increasingly oriented towards the EU, with more than half its exports going to EU countries, a trend that has increased after Russia introduced a series of trade embargoes in the second half of 2014. However, remittances from Moldovans working in Russia still account for a substantial share of GDP, though these are expected to drop in 2015 amid a contraction in the Russian economy.