#DevTalks: Navigating Crisis and Leading Change in Moldova

DISCLAIMER: This webinar transcript was loosely edited and there may be inaccuracies.

Karen Donfried: Good afternoon, everyone, and a very warm welcome to this session of the Growth Lab Development Talks. I am Karen Donfried and I'm a senior fellow at the Belfer Center here at the Harvard Kennedy School. And prior to that, I was the Assistant Secretary of State for Europe and Eurasia. So I have long been a fan of Moldova, and it is such an extraordinary pleasure to be moderating this conversation with Natalia Gavrilita. She is Moldova's former prime minister. And this is for a conversation about leading change and navigating crisis. Something which, for better or for worse, you owned your skills on. I had the privilege of watching Natalia when she was prime minister. And if you want an example of bravery and resilience, it surely is Moldova. It is arguably the most vulnerable country in Europe today. It has to fend off Russian malign influence and also is a neighbor to Ukraine. So they have been directly impacted by Russia's war against Ukraine. And Italia was prime minister. She was part of a very dynamic duo with Moldova's president, Maia Sandu. And I just found both of them inspiring in their leadership. What we're going to do is I'm going to give you the opportunity to set the stage with some brief comments. Then I have a few questions for her, and then I'm going to open it up to all of you. So please be thinking about what questions you want to ask her as she's speaking. So again, great to have you here. Over to you. 

Natalia Gavrilita: It's great to be back at the Kennedy School and it's great to have this event. I'm very excited about your interest and to have such a knowledgeable person moderate this discussion. Karen knows the region and the context very well. Also, I have to be very careful what I say because Professor Hausmann is here and I have to show that I've taken all the great lessons from my class with him back to managing the crisis and implementing structural reforms in Moldova. And also by surprise, Lucio Vinas de Sousa is here, who right after Kennedy School I worked with at the DGA and the European Commission, and we wrote a couple of interesting papers on quasi fiscal activities in Moldova. And the trade flows with Russia will touch upon in my presentation. I want to start by sort of you imagining what it's like primary that is neighboring Ukraine on the 24th of February. We had, you know, we read the intelligence, saw the news. You know, there was this debate, will there be a war or not? And we did all the contingency planning that we could. But ultimately, we really didn't think that such a terrible aggression and a large scale war can happen right in our neighborhood. And we had a lot of reasons to be very worried. First of all, we shared 1200 kilometers of border with Ukraine, one third of which is with the separatist Transnistria region, which the central authorities do not control. This separatist region has Russian troops on its territory that supposedly are guarding some 20,000 tons of munitions that were left from the Soviet Union in the village bordering Ukraine. Also, majority of the people in Moldova believe in neutrality. For 30 years, neutrality was seen as a way to convince the Russian authorities to withdraw Russian troops from Moldova. And this has been talked about so much that, you know, we didn't have any security umbrella. We didn't think about investing in our security and military because it was frowned upon by Russia. And then we touted neutrality as sort of a solution to getting the Russian troops out. At the same time, this war had the potential to bring a large humanitarian crisis because the western most of the eastern, most sorry border crossing point with Ukraine is only 60 hours away from Odessa. And the region of Odessa has a population of 2.3 million people. So just the region and the whole of Moldova has a population of 2.6 million people. Later, when I visited border crossing points and interacted with the refugees, I've even met people who walked from Odessa to the border with Moldova. And then also Moldova is quite a poor country. Our GDP per capita is 5,230 USD and we were already grappling with, you know, the consequences of the pandemic and energy blackmail that Russia put us through in the autumn of 21 and rising inflation. So all of this together, we were facing sort of a potential of a military incursion, a humanitarian crisis, coupled with all the problems that we already were facing. And politically, the government had been in power only six months. And this the last parliamentary elections that Moldova had were actually quite remarkable and extraordinary after years of sort of not having a purpose and being ruled by various oligarchs and pro-Russian forces. And after a massive banking fraud that we saw in 2014, after 12% of GDP was siphoned off through labor. So we saw this wave of people voting for rule of law, rule of law and justice reform, corruption, structural reforms, fair competition. And so expectations were very, very high that what the government would do is actually quickly transform Moldova into a sort of developed European state. So. What? What we did was actually implement everything that we sort of prepared for or so. I think what is extraordinary and how sort of the Ebola in Moldova mobilized is that we managed to deal with the crisis in the way that changed Moldova's reputation. And at the same time, we very much moved forward with the structural reforms that people voters voted us for. So just to give you a couple of sort of outcome indicators, we ultimately received five times more refugees than the UNHCR thought our total capability to be at. I think some over 600,000 people crossed through Moldova and at the highest point we housed 125,000 refugees. And for a country as small as Moldova. This was the highest per capita figure out of any European country. At the same time, we supported Ukraine in other ways that we could. So we are very strong on solidarity. We did all this work together with the Romanian government to improve logistics. So we opened a floating new bridge. You know, no new bridge with Romania has been in the works for 30 years and we in just several months build the infrastructure leading to the river and build a floating bridge on the river to ease some of these logistics constraints. We'll be in one year diversified our 100% dependency on Gazprom for gas provision in the right bank, Moldova. So the what is under the control of the central government to zero gas from Gazprom. So we bought everything on the international markets, even though everybody knows prices went crazy. We I think nobody expected Moldova to be the first country to use the Greece Bulgaria interconnector or the first country to use the Trans Balkan pipeline in reverse with sort of all the not only with sort of the ability to go to the markets, but all the governance arrangements that that means and all the contacts that you need to make in order to make it happen. We also implemented structural reforms at the same time in 2022. We were the highest performer on Media Freedom Index. We also improved our Transparency International indicators to reach a ten year high. So corruption went down, particularly in state owned enterprises and other areas that customs, fiscal authority and so on. We also started an external evaluation of judges and prosecutors together with international partners and started sort of a very comprehensive justice reform and improved our standing on the rule of law indices. And of course, this all came at a price. So we had quite profound stagflation. The economy contracted by 6% in 2022 and a further 2.5% in the first semester of this year. Inflation at its highest in 2022 was 34%. It's still over 10% now. We saw the standards of living falling. The tariffs for gas increased seven times for the population. This means that, you know, an average Moldovan household spent 15% of their income on energy bills, compared to less than 5% in European countries. And last year, this figure went up to as high as 43%. So 43% of the incomes of our average household went to pay gas bills or electricity bills. So what what we did. We also introduced very quickly a targeted energy vulnerability program which provided cash transfers to the most vulnerable population and reduced some of this costs for fuel for the households. But of course, ultimately we also pay paid politically. And the government that I led had to resign in order to provide an opportunity for continuing further reforms and giving some optimism to the people that things can go better. Last thing I want to say before we open it up to questions is that I'm very proud of Moldova as an example of women's leadership. You know, I think traditionally we see sort of some of these security, military jobs or crisis management in more traditional light. And I think that what we've demonstrated is that women can manage such situations just as well. I want to add that besides the president's being a woman and the prime minister being a woman, and I think during that time, we were the only country in the world that had sort of both positions filled by women. We also had the minister of Internal Affairs, a woman, and that ministry basically handled the brunt of the refugee crisis, but also the sort of border management and security issues. We also at that time had a head of the constitutional court who was a woman then the anti-corruption prosecutor. And this is also due to the policies we've implemented. So we've introduced double quota in Parliament, for example, and 40% of our members of parliament are women. And in these elections coming, we have local elections coming up in November. We are taking this quota to the local level as well. We've also introduced a number of policies to make it easier for women to participate in such responsible positions by making more flexible sort of parental leave rules around daycares and so on and so forth. So I'm very proud to say that sort of the entire society mobilized in a way that completely changed Moldova's reputation. And then from a country that was only in the news due to some, you know, outstanding corruption crisis. We turned sort of the reputation of Moldova as a small country with a big card who, in the midst of a war in neighboring Ukraine, managed to support the Ukrainians, support the refugees, support solidarity lanes and food security in the entire world, and at the same time transform the country in a way that was worthy of becoming candidate to the European Union, which was ultimately our biggest promise to our people. When we went into elections. We said that by 2024, in the four years of the mandate, we would apply for candidate status to the European Union. So when we started, we didn't even think we could apply until 2024. But the way that this worked out is that we not only applied but also became candidate. And we are very positive that in a month or two there will also be a decision of the opening up negotiations with Moldova going forward. So I will close by saying, watch this space. A newcomer to the European Union and come visit Moldova, Research Moldova. You know, when I was here, very few people knew about Moldova. I kept talking about it in all my classes, so my friends nicknamed me Moldova. But I think now that you came, I think now there is a growing number of people who could have that nickname. So that that is a very positive development. Thank you. 

Karen Donfried: Well, you've made it clear why the Moldovan story is so remarkable. You've also made it clear the challenges you face and the statistics you rolled out about stagflation, about economic contraction, standards of living, falling high energy costs. These are challenges that are still with Moldova. And I'm curious what you see as the recipe that leads Moldova to restore economic growth. And this will be part of your new position as well. But just what did you learn in Professor Hausmann's class that you can that can lead Moldova? 

Natalia Gavrilita: Well, the main thing I learned is that we need to be humble about, you know, the recipes for growth. And we also need to understand very well the context and the sort of take decisions based on on the context. And it's actually very hard because Moldova is a small country, it's very small an open economy. It's very much influenced by what is happening in the region. It also has the problems that many Eastern European countries have, and that is a deficit of people. We have very high outmigration and low fertility rates. So the population of Moldova is shrinking very rapidly. And so we have to think like, what is the response to that? And, you know, even if we want to attract a competent labor force from abroad, actually when there's a war in the vicinity, not many people want to come. So we have to think about, you know, our labor force and where do we direct the scarce resource, So what type of sectors we want to develop and why? You know, we were talking about industrial policy coming back in the US and Europe. So I think we need to do some sort of fresh analysis and see, well, under these circumstances, what is our offer to investors, to our development partners, what is our role in the region? What is our role in a future reconstruction of Ukraine? What do we need to do to sort of improve our capabilities, our infrastructure, to be an active participant in these developments? And at the same time, I mean, we have to do what we've done. We know that we need more capital. We needs higher productivity. But without proper rule of law, that's actually very difficult to achieve. So we need to continue with justice reform, too, with governance reforms to improve our institutions, to improve our services of the expectations of our people. Because ultimately, you know, it's this economic differences and wages and then this outlook and expectations that drive our people and especially the most. Talented people out of Moldova. So it's very challenging. Again, I've met with investors who are saying, Oh, we've waited for someone like you to come to power in Moldova so long, but we're going to wait until the war is over and then make our decision about investment. So, you know, we we have to think and we have been thinking with our partners, for example. You know, guarantee instruments like, you know, guarantee for political risk or currency risk that would help some investors to make the leap come to move Moldova, even even before the war is over. So there is a number of of things that we need to do. And I think that we are trying our hardest to do it. I now I'm also I'm working on a new economic think tank in Moldova to work on some of these solutions to to the more strategic issues that governments sometimes don't have the time or the capability to think about because of low state capability, which you probably all know the. 

Karen Donfried: Thanks so much. You have shared with me that along with this challenge of economic growth, the other big challenge for Moldova as it seeks to stay on this pro EU path that your government and President Sandu ushered in is the challenge of Russian malign influence. You have a very large country that is actively seeking to destabilize your country. How do you fight back against that? 

Natalia Gavrilita: So even though we are not involved in the military conflict, we definitely have a hybrid war with Russia. So in the beginning of the war, you know, in some of the meetings, I would even say, look, Russia doesn't have to spend money on a missile, you know, to attack Moldova because it can attack through hybrid means and destabilize the country to the point where it doesn't need missiles. So we have seen a ramping up of these hybrid war elements like cyber attacks, for example. We've had more than 200 cyber attacks in 2022, including in August of 20 2022, the the biggest attack in the history of Moldova. And I'm glad to say that through a number of techniques, we were able to withstand that attack, even though its magnitude sort of was was higher than our capacity. I'm not an I.T. specialist. I can tell you all the details, but it was quite a nervous two or three days, including because we had attacks from within. So we've had our own authorities. We had sort of servers that were taken over and there were attacks from within. So we managed to stop some of that in time to to not do the damage. At the same time, we had in 2022, more than 300 bomb ballots. So pretty much every day we saw bump, bump alerts to the airport in particular and the court systems. So the airport. So, for example, I will tell you, I was going on an official visit to Romania and they called in and said there's a bomb. Right around the time that my flight was supposed to leave. And then 4 hours later, the foreign minister was supposed to leave on another flight. There was a bomb alert again. So in two days. Do you think that was a coincidence, that it was like bomb ballots? Right when we were supposed to leave, But that disrupted the law. It's sort of you know, this is this feeling of insecurity that people have. Like they hear about one ballot every day. And then most importantly, we have an extraordinary amount of disinformation and fake news and half truths. And so we had a lot of influence on Moldova, still has about 30% of Russian speaking population. These are not just Russians, these are Ukrainians Bulgarians. A minority, a Turkic minority called Gaga was and even some Moldovans. Historically, they they've been following more sort of the the the Russian language news. And we closed six TV stations, the same TV stations that European Union closed. So these were Russian retransmitted channels. But then we saw everybody move to online. And now the Internet is like 70% use it as one of the three top news providers. Telegram is massively popular in Moldova. And people believe in what they read there. And sometimes I would read things about sort of my fellow member, like members of the party, you know, like members of parliament, and I would actually have to take the time and go and ask them, because some of these half truths are just so difficult to disentangle, even if you have massive amounts of information and critical thinking. Now, think about people who you know are Russian speaking and maybe poorly educated. This changes a lot, their attitudes and their perception of the reality. So it's very difficult to think of solutions to to these problems right now before the local elections. We're seeing massive amounts of cash going to through what? Of these pro-Russian parties from a fugitive or led by a fugitive oligarch who is not in Moldova but still manages to disrupt the politics in Moldova. So this is why when yesterday some students asked me what is the most important element of keeping us to the pro-European path? And I said it's actually combating disinformation. It's investing into good content. It's investing in education and critical thinking. I mean, this is more long term, but investing in the free media and sort of helping our societies. I think liberal democracy is under attack everywhere. And we do need good content to be able to to maintain our country's on the spot traffic. 

Karen Donfried: I have so many more questions to ask, but I know all of you do as well. So I want to come to those of you in the audience who wants to jump in, please. You might you. 

Attendee: Thank you so much, Prime Minister, for your time today. And in 2018, I visited Moldova. I research Moldova. It's a beautiful country and I really echo your call. Everyone should should do that to make wine. And they have fantastic, fantastic wine. And then among many other things, my research had a lot to do with the situation in Transnistria back in 2018. There was some hope that the negotiations were moving forward. The situation has changed a lot now, so I was wondering if you could share your thoughts on in the context of Moldova nowadays with the EU, given kind of its status on one hand and Russia behaving so aggressively in the neighborhood, on the other hand, what can Moldova do and how can will be supported to bring Transnistria back? Thank you. 

Natalia Gavrilita: Thank you for this question. So counterintuitively, I actually think there is more hope now than in 2018. So one important thing that happened after the war started is that the border between Moldova and Ukraine on the Transnistrian perimeter was closed. So this means that this big hole that was sucking out resources through contraband and smuggling and, you know, the illicit activity now is closed like all goods from the Transnistrian region, which has historically a better developed industry than the the right bank, Moldova, because it's separated by a river for those who don't know. But yeah, so now all goods go through Moldovan border crossings and all of a sudden we have more leverage. Companies have had to register. It means they have to comply to Moldovan legislation. We have seen that, you know, the only way that the TRANSNISTRIAN can sell the electricity that they produce is to Moldova. And with the expiration of the gas transit agreement between Russia and Ukraine, there is a real question. Well, where are they going to get the gas from? And then, you know, what will the price of gas means for the competitiveness of their production of electricity or the metal processing industry or the cement industry and so on? So so the real question is what happens to the 1500 troops that are stationed on the territory of Moldova? And then, you know, how do we integrate the region in a way that doesn't disrupt the advances that Moldova has made? So we had a positive signal from the EU that, you know, we could move forward with the EU integration process even if we have a frozen conflict. But we want to integrate these people and they all have Moldovan passports. So actually they could come and vote and participate in the political process. So I think that sort of managing that and that a transition period where they are exposed to at least some alternative news because for 30 years they've only had Russian propaganda. And I was giving this example recently that my family comes from the transition region and sometimes my aunts and uncles believe what they read in the Russian newspapers rather than me. So that tells you how strong that propaganda is. So we we we need to analyze the data that we are getting from this change. Significant change in circumstances. We need to think about our leverage and negotiate in terms of sort of the new economic distribution. And we need to think what is the type of transition towards democratization that would allow us to integrate the Transnistrian region without destabilizing the rest of Moldova? 

Karen Donfried: Yeah. Yeah. 

Guest: Many thanks. One of the pieces that actually wrote all those years ago was what was originally called The Cost of the Normal Dover, which was a sort of a blueprint on how it could integrated as a new stretch of the border economic body of Moldova. But that's not my point. The point that I would like to try to make is the following. Once you enter the European Union, the European Union is not something that necessarily yields what you want to get in the end of the day. There's no guarantee of convergence, as we use on European parlance, but provide you some tools for convergence for your account. I come from a country that actually has failed to converge in the past four years, so we didn't use the opportunities that would be a and no integration offered to us. From a point of view of your own strategic thinking about what's going to be the niche that Moldova is going to aim for once in the European Union, what are the users that you are going to have for the resources that will come once you become a professional counselor because this unlocks the envelope of resources for you. Is there any strategic thinking in terms of how you are going to use this opportunity in what is the niche that you want to have as an economy, as a country On the broader structure of the union is not only our question for Moldova, but for the other countries, especially for Ukraine. Once we actually start this process. So if that is the strategic thinking, I would like to try to understand from you what it is and if it is not. I would urge you to start doing this. 

Natalia Gavrilita: Thank you. This is actually the million dollar question, and this is why we are trying to bring the growth lab to Moldova to do some analysis and help us come with this, come up with this sort of strategic niche. I mean, again, I said there is change in context and actually it's very difficult to analyze what is that needs. Given the the the change in context, then I'll give you some examples. So Moldova is currently one like a big agricultural produce. I mean, it's only 10% of GDP now. It used to be much more, but it employs a lot of people. So, you know, we could start doing more and processing, but then who are we competing with? What are the logistics costs and so on. So these are very good questions. But other sectors, pharmaceuticals, for example, we have a very good medical university with good value for money, and therefore it's popular even with international students. And we also have some pharmaceutical companies that, you know, some of them are Romanian companies that have European certification. Structural reforms and regulations in the last two years in the pharmaceutical sectors. It has gone very much under the radar. But and we've become all of a sudden competitive for some products because logistics are so expensive with China. But do we know what's going to happen in two or three years? Is China going to become competitive again? Or we could invest in infrastructure and, you know, expand our logistics routes and create sort of some of these logistics centers. But then now there is a lot of demand because the just airport is closed. What happens when the support reopens? Will that flow up all of a sudden and all this investment will be and or poorly spent? So, you know, industrial policy in the past. Her birth name because, you know, it was sort of accepted in the literature that governments are very bad at making these bets, you know, and they cannot come up with sort of the right industry to support order. And it's a hit or miss. You know, luckily now we have better frameworks, but still, these are not trivial questions and should be thought through very well. And you also need to have a political process where this is understood beyond the lifetime of a government which in Moldova on average lasts a year. So, so, so these are the type of issues, precisely the type of issues that we should think of in the process of European integration, because it will affect the sequencing of adjustments to some of the regulations of the European. [00:35:47][176.2]

Karen Donfried: Thanks. Yeah.

Guest: Thank you so much for being here. My name is Lucas. I'm in the MVP program and before I worked in the European Parliament. And my question is about EU accession, and I'm curious to learn. What do Moldovans expect from the accession process? Because we all know that the Western Balkan countries, they've been in this process for years, sometimes for centuries, and lately they haven't been so many steps forward. So really my question is, what do you and what do Moldovans expect from their status as a country? 

Natalia Gavrilita: So I think what I expect and what Moldovans expect is a bit different. So what I expect is an impetus for the true transformation of Moldova. I mean, we have seen from the European integration process that this is a process that, if used wisely, can provide the political support to do some of these very difficult transformations. So I think, you know, the process itself is just as valuable as the ultimate prize of becoming member of the European Union. In fact, we have seen from some countries that once you get that prize, it becomes difficult again to stay on the path of transformation, particularly in the rule of law and justice sector. So. To me, the next several years are crucial because, you know, we make it honored by 2030 as our objective is, you know, we can actually, as part of this process, deeply transform Moldova in a way that will bring it to a new equilibrium. What people expect is peace and prosperity. And I think that's what people expect everywhere. And yes, people want that quickly. And, you know, we need to work with people to help them along the way, to help them understand and have the right expectations about what type of sacrifices do we need to do in the short term to achieve those objectives in the medium and long term. And even then, you know, it's a fast changing world. And, you know, sometimes we may not get there. So I think this is very natural. And I think all politicians and all economists and technical people should understand this and then work with these expectations. 

Karen Donfried: And like it. It's about the journey, not just the destination. Okay. Let's come to this side of the room for a change and I think we're back to you. 

Guest: Thank you. Thank you for visiting us. My name is Kim. I work at the growth lab, and I'm actually very interested in the Moldovan case. In a way, I'm asking a related question. I wanted to hear your views on the EU, but from a people's perspective, you have a 2.6 million population, as you mentioned. I believe at this point for sure, more than a million of those hold Romanian citizenship. So technically there are EU citizens as well, even though many of them still living in Moldova. And I'm sure that presents it's a very regional situation, I believe, to be in on that scale. I'm wondering how you think about the challenges that this creates for for the country in the opportunities also that this could lead you to either individually for such citizens, but also for the country collectively? 

Natalia Gavrilita: Thank you. This is a very good question. So indeed, basically half of the population of Moldova, at least half. Are already EU and they citizens. This means that they can travel freely in the EU, get jobs in the EU and, you know, benefit from all the advantages. And you know, in the beginning of the war, we actually saw a lot of people just take the passports and go. And that presents a whole set of challenges. At the same time, I'm optimistic. I tell everybody, look, you know, we are a small country and half of the population has already integrated whether we want it or not. So actually, we are very good. Well, you know, success story and good case scenario. So invest in us and we will sort of be a success story of making it to the European Union quickly and hopefully not just balancing it, because in the Western Balkans I had recently a conversation where, you know, we need to bring the European Union in our countries and not our country's problems into the European Union. 

Karen Donfried: I know you in the back. And then I want a woman to ask a question, too. So where? 

Guest: So building on that, we talked about our mobile business being with the largest GSM workers. How is that affecting the whole society? I mean, I was a refugee and I was affect your business. You have your business. 

Natalia Gavrilita: So it's very interesting because this refugees case study is very different from any other refugee situation. So I've worked on refugee issues before, immigration issues before, and I have seen some of the refugee camps in Jordan, for example, or, you know, I have worked in the West Bank, so I know very well sort of the situation of Palestinian refugees in the Middle East and Syrian refugees and their plight. And here what we had is people who are have had historically very close relations. We have in our society many, many households who have friends and family in Ukraine. And they actually when you talk about refugees, they actually house their second cousins, you know, for a while. So. So there is a lot of interlinking. And also Moldovans are bilingual and they all speak Russian. So it's easy for people to integrate. We very quickly adopted rules that allowed the refugees to participate fully in our life. So in the social and economic life. So we gave them the right of work. So we had entire projects, for example, in the cabling industry move from Ukraine to Moldova. We also received support from our partners, not immediately, but over time where, you know, we are covering the costs of health care for the Ukrainian refugees, we are covering the cost of education. And we also I mean, this refugee population is largely women and children because men are not allowed to leave Ukraine. So what we have seen is that sometimes it's a and this happened after the pandemic. What we've seen is sometimes there is a whole parallel world where just Ukraine move to Moldova, and it's probably not making a difference in either the I mean, it's making a difference only in consumption because they work online for Ukrainian companies that children study online. By the way, I think Ukrainian teachers should receive monuments and medals after this, because sometimes in these refugee situations, the online classes where the only normalcy that the children saw and that was very important. So so part of the population, it's like they're living in Ukraine, but they are just physically located in Moldova. Part of the population has integrated, are working. And, you know, if anything is helping Moldova because of the high deficit of people and probably after they leave is when we're going to say, oh, actually, you know, that contributed to growth. And we didn't understand because we were on a. Negative drunk and then, you know, part of it. Like, for example, I mean, there are really interesting issues to research, really. For example, Moldova has had very high cumulative inflation, but the exchange rate is not affected. This could be because some of these Ukrainian refugees are coming with cash to Moldova and they are orders of magnitude different than in Moldova. So some of them may be actually very affluent refugees. And we've even for them, it's very comfortable to live in Moldova. We've seen even a few European countries to Moldova because it's much more like home and it's closer to home and there could be some circular migration. By the way, it's very interesting, I think, to study circular migration in light of many Moldovans holding Romanian passports because, you know, you would think that sort of this keeps their link with Moldova and then allows them to return much easier because they know they can leave at any time. So it's very it would be very interesting to disentangle some of that. But basically we need policies to be able to attract people and at the same time sort of allow people to realize their potential wherever they are. 

Karen Donfried: Lots of great analytical work. Yeah, please. 

Guest: I commit a bank to the UK Government and I Shorenstein but I had I've worked closely with Annabelle Ronco and Anastasia with you on strategic communications efforts. So my question is around that, both about perceptions of the EU and all the investments, the complex policy topics. You're talk about this growth, but how is that felt and understood by the day to day as a citizen? Something that we try to have challenges with in the UK? And I grew up in Serbia where I feel, you know, friends ten, ten years ago really excited by EU accession, really supportive. And then I speak to a lot of them now and I've gone completely the other way. So I want to hear a bit more about how you see that being managed in Moldova. That's a very difficult question. So again, everything depends on where are people getting their information from? Who do they trust? And how do we support or foster or affect this trust. So as I mentioned, like we we tried to communicate throughout the crisis. You know, I, I had press conferences every week after the government meeting. But ultimately, you know, it might have been worse than better because then you would have somebody like cut half a sentence and manipulate it. Right. So. So it's a very difficult question. So on one hand, we have achieved some progress. So, for example, support for the European Union went up, Support for NATO went up. This is very important in Moldova. But at the same time, you know, in the beginning of the war, people blamed Putin, Russia, much more than now, Like they've come back to an equilibrium because they've they've watched the news, you know, there's fatigue and then they sort of very easily fall back into believes that they have held previously. So we have created we are trying different approaches. So we are working with different recipes. So we have created this institution, a new institution which has just been formed to combat disinformation from a national security perspective. And it's a very difficult topic. So we talk to civil society a lot. We believe in liberal democracy. We believe in, you know, the freedom of speech. And everybody's right to say what they what they feel. At the same time, we need to limit the Russia's influence because it's actually a tool of war. So. I think we're going to also, I would say watch this space. We're going to be at the forefront of like using or creating a government institution that, you know, will try to combat disinformation from a government perspective. 

Karen Donfried: Well, this has been a terrific conversation and unfortunately. One more question. One more question, and we'll pick one, one, one that we're back. So short question. Short answer, because I know folks have commitments at one.

Guest: You just heard as well, folks, I'm not sure this is going to be a short question and the short answer, so maybe we can cut it short. I think what I was really curious about is to hear, you know, that Moldova, too, has, you know, sort of developed some comparative advantage around medical education and pharmaceuticals. And I know, you know, there are a couple of European Union countries that do that, Hungary and Latvia, but prohibitively hard for Germans and Italians, for example, to get to medical studies in their countries. And so they go to Latvia to go to Hungary. And it's phenomenal universities. The problem that you see is that these countries sometimes don't really have the ecosystem to retain the talent, right? You have talent inflows, but then, you know, people in especially within the European Union, because it's easy, they go back home and by all means, Italy needs good doctors. This makes me really happy that people come back. But I was just wondering about your sort of like talent retention strategies, too, and sort of the ecosystem you're creating or are you planning on creating around developing, you know, maybe specialty experts in the field of, you know, medical medicine, pharmaceuticals, you know. Veterinary services, etc.. Thank you.

Natalia Gavrilita: So to make it short, I will say that growth is the best strategy. I have not seen any better strategy to get out of poverty, improve your systems, improve governance and just, you know, become better at everything than ensuring economic growth and prosperity. If I am to go just a little bit, then to details for the IT industry, for example, we have created a special fiscal regime and our I.T. specialists are staying in the country more than other areas. You know, we have now ideas over 10% of GDP. And this creates an ecosystem, you know, for the I.T. specialists. So now we have these, like really cute cafes and co-working spaces, and it's nice design. And so in a way, what we need to do is sort of pursue our strategies for growth. And I think if there is the sort of the cost benefit of providing sort of some special attraction and then just letting sort of the ecosystem develop. 

Karen Donfried: Well, Natalia, this has been fantastic. And you've talked about the many challenges Moldova faces. You've talked about the feeling of insecurity Moldovans have as they face these economic concerns, as they have more next door. You've also talked about the fact that reforms fit tight, and there's a question about how much time you have. You mentioned the local elections in early November. It is not looking like the governing party will do well. Those local elections matter in and of themselves, but they also matter for the presidential election next year, for the parliamentary elections in 2025. And I think probably everyone in this room hopes very much that Moldova will be in a place where you have a government in place that can see Moldova through on these reforms. And there are a lot of smart people in this room, including at the growth lab, who I know were committed to trying to help you think through what the best answers are for Moldova. And so I want everyone to join me not only in thanking Natalia, but also in wishing the very best for Moldova as it seeks to deepen its democracy and reach that Europe goal. So thank you. Thank you very much.