July 22, 2015 / 10:10 AM / 2 years ago

Troubled Moldova edges towards formation of new pro-Europe government

CHISINAU (Reuters) - Three pro-Europe Moldovan parties announced on Wednesday they had agreed to form a new ruling coalition to produce a government to pilot the country towards integration with the European Union and unlock fresh foreign funding.

The small ex-Soviet state, sandwiched between Ukraine and EU member Romania, has been in turmoil after a banking scandal involving the disappearance of $1 billion from the banking system and the resignation of Prime Minister Chiril Gaburici in June.

A statement said the Liberal-Democratic Party of former prime minister Vlad Filat, the Democratic party and the Liberal party had agreed in the early hours on Wednesday to form a new coalition dedicated to European integration.

But with only 52 seats in the 101-seat parliament, the three parties have only a slender majority in a country where a considerable part of the 3.5 million population is Russian-speaking, many of whom favor closer economic ties with Moscow.

Moldova's political instability has held up agreement on a new program with the International Monetary Fund which has in turn blocked disbursement of EU budgetary support.

The first task of the new coalition will be to decide on a prime minister. Filat led the government from September 2009 but was forced from office in March 2013 following charges that his government had been involved in corruption.

Acting prime minister Natalia Gherman, who also doubles as foreign minister, may be asked to stay on though Education Minister Maia Sandu also is a possibility, commentators said.

Another pressing task for any new government will be to trace the $1 billion - equivalent to one eighth of Moldovan gross domestic product - which disappeared from three of the country's largest banks, bringing thousands of people onto the streets of the capital in protest.

Liberal party leader Mihai Ghimpu, one of the three coalition leaders, reiterated on Wednesday that finding the missing cash should be given top priority by any new government.

Moldova embarked on a pro-Europe course in 2009, after years of communist rule, despite relying hugely on Russian energy supplies and the presence of a pro-Russia self-proclaimed statelet called Transdniestria within its borders.

But economic mismanagement and a failure to tackle corruption has kept nostalgia for Soviet times high among large section of the population.

Gaburici himself stepped down in June after his educational credentials were challenged by the opposition.

Economic turbulence in Russia, Moldova's main trading partner, has hit the pace of Moldova's growth in 2015 while Russian involvement in the separatist conflict in neighboring Ukraine has brought further concern to its pro-EU leaders.

Writing By Richard Balmforth; Editing by Dominic Evans

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