Socio- economic and political situation of the area

The year of 2001 showed positive trends in both Romanian and Moldovan economy. Romania became the region's top performer in terms of economic growth and increases in real wages. However, the foreign debts of both countries remain rather high as well as foreign trade deficit, inflation, and unemployment. While Romania had been invited to join the EU accession process, Moldova is viewed by the EU as an outsider despite its acceptence in the Stability Pact and its hopes for a similar invitation from the EU. The political situation in Romania is considered a stable one, based on democratic principles. In the current Parliament the Social-Democratic Party (43%) and Greater Romania Party (25%) have the biggest number of seats. In the Moldovan Parliament, however, the Communist faction dominates (70 %), which demonstrates the need for the strengthening of democracy. The existence of the secessionist region of Trasdniestria is one of the main destabilizing factors on Moldovan political horizon.

Identifying main cross-border co-operation challenges for the case study

The Euroregions' Councils and Comissions have regular discussions of the common projects, but there is still much to do to adjust the legislation, define the legal status of the regions, and create free trade zones in the framework of the Euroregions. The special border regime existing between Moldova and Romania facilitates cross-border cooperation between two countries. Before Moldova's accession to the Stability Pact the cross-border cooperation between two countries was challenged by their belonging to two different EU programs (PHARE and TACIS), which hindered the implementation of joint projects. After political changes in Moldova in 2001 its bilateral relations with Romania deteriorated. Moldovan Government does not accept the Romanian approach to Moldova as to "the second Romanian State" viewing it as a danger for Moldovan sovereignty. While Romania is a second largest importer in Moldova, Moldovan exports to Romania continuously decrease due to duties and taxes excised by Romanian Government disregarding the existing bi-lateral agreement on the free trade between Moldova and Romania