This is the latest instalment in a series of articles on administrative and territorial reform and local government. You can read the first two articles in the series here and here.
It looks convincing on paper. There’s the mayor. There’s a council. There’s a budget. There are powers. There are meetings, reports, programs, regulations and beautiful words about local democracy.
But a territory becomes independent not when it is allowed to hold meetings, but when it has its own economic base. Not just money for current maintenance, but the ability to produce income, jobs, added value, investment interest and future.
Without this, self-government becomes a neatly formalized dependency. Responsibility is transferred to the local level, but the economic engine is not. The territory becomes responsible to the people for roads, schools, water, garbage, lighting, social services and quality of life, but the key resources remain at the top: taxes, transfers, investment decisions, government programs, infrastructure, rules of the game, party vertical and donor priorities.
This is the main paradox of Moldovan local self-government. It exists formally, sometimes even detailed legally, but too often lacks its own economic backbone. There is local power. There is no local economy in the full sense.
The paradox of Moldovan self-government
The world experience has long shown a simple thing: the transfer of powers works only when together with responsibilities the territory receives a revenue base and real development tools.
If costs and responsibilities are transferred downwards, while revenues and key decisions remain at the top, there is not autonomy, but dependence in a new package. A weak territory receives a mandate but no resource. It can be called autonomous, but it does not cease to depend on those who distribute money.
Authority without a resource base is not autonomy, but an administrative mandate to manage poverty. The mayor begins to think not as the master of the economic territory, but as a beggar in the distribution system. He does not so much build development as seek funding. Not so much building his own tax base as seeking inclusion in a program. He does not so much manage the economy of the territory as try to get a road repair, a school roof, a grant for water supply, money for lighting, a sewerage project, or another donor package.
In this way, local government becomes like a store without a warehouse or cash register. The sign is there, the salesman is there, customers come in, complaints are accepted, but the goods and money are elsewhere. Then they wonder why the store does not develop. Because it is no longer a store, but an outlet for other people’s decisions.
For Moldova, this is not a theoretical subtlety. It is the central problem of the whole territorial policy.
We too often discuss the administrative shell: how many districts there should be, how many mayoralties, how to enlarge settlements, where to draw borders, what functions to transfer upwards or downwards.
But much less often the main question is asked: what will this territory live on after the reform? What economic function does it fulfill? Where is its revenue base? What does it produce? Where is the added value created? Who controls the investment logic?
Without an answer to these questions, administrative reform remains a rearrangement of furniture in a house where the heating has not worked for a long time. You can move a cupboard nicely, but it will not make it warmer.
The Moldovan reality is organized in such a way that local authorities are often responsible to the population for the consequences of decisions they do not make themselves. People come to the mayor because he is the closest. They ask him for roads, for water, for schools, for jobs, for garbage, for young people who leave, for businesses that do not come, for villages that become empty, for cities that lose their meaning.
But a large part of the factors that determine the fate of the territory is beyond its control. Tax policy is determined by the center. Major investment decisions – by the center or external capital. State programs – by ministries. Large infrastructure projects – by national agencies. Donor money – by donor logic. Export channels – external markets. Political support – by the party vertical.
And the mayor remains face-to-face with the population and with a budget that is sufficient, at best, to maintain vital activities.
The figures only confirm what can be seen with the naked eye. According to the data of the Network of Associations of Local Authorities of South-East Europe (NALAS) for 2024, the share of own revenues in the structure of local budgets in Moldova is only 7%, while the average value for the countries of South-East Europe is about 30%. For comparison: Montenegro – 60%, Austria – 47%, Romania – 24%. Moldova – 7%.
Only 47 out of 892 mayoralties of the country are able to cover administrative costs from their own revenues. The remaining 94.7% depend on central transfers already at the level of basic functioning. For mayoralties with a population of less than 3,000 people – 776 out of 892 – about four lei of administrative costs are incurred for every leu earned.
A structural trap for local authorities
It’s not just inefficiency. It is a structural trap. A small demographic base generates a weak tax base that cannot even support its own administrative apparatus.
In such a system, local government may be elected, active and conscientious, but it is still a power without leverage. It seems to represent the territory, but it has to constantly coordinate its future with external centers. It seems to be supposed to develop, but in fact it administers the deficit.
This is how a special type of local government appears – not the power of development, but the power of intercession.
Territories compete not for investors or for a place in the production chain, but for access to distribution: who will get the road, who will get into the program, who will get the project, who will negotiate with the ministry, who will write a better application, who will be closer to the political center. This forms a special culture of governance. Not a culture of development, but a culture of asking. Not a strategy of growth, but the art of beating the money out.
In such a culture, the mayor becomes not an architect of economic strategy, but a manager of scarcity. His success is measured not by what new function the territory got, but by how much money he brought from outside. He brought a project – well done. He got a transfer – well done. He got funding – well done. All this may be necessary: people need a road, water, a school roof, lighting, sewerage. But if there is no economic motor behind it, the territory remains in the same dependence. Just with a new road to the old problem.
The Soviet system, for all its deformations, gave territories productive functions. Some cities were industrial hubs, others were agro-processing hubs, others were transportation hubs, and others were administrative or logistical centers.
After 1991, many of these functions were destroyed, but local authorities were not given the tools to create new ones.
They got buildings, networks, roads, social infrastructure, population, expectations – but not a full-fledged policy of repurposing. Privatization often ripped production chains into separate property pieces. The market opened up, but local territories entered it not as strong actors, but as suppliers of raw materials, cheap labor, land resources, and migrants.
Thus a typical post-Soviet trap emerged: formal rights appeared faster than economic abilities. Property appeared, but an effective owner did not always appear. Local self-government appeared, but no revenue base appeared. Strategies appeared, but production logic did not appear.
A new signboard of the nature of dependency
Institutions in general change more slowly than signboards. You can pass a law, create a development region, rename a district, merge city halls, write a new strategy, create a platform, a hub, a cluster or an agency.
But if the real economic flows remain the same, the new signage does not change the nature of dependency. The old track continues to lead to the same place, even if new European signs are placed along it.
This is especially noticeable in Moldova. There is an amazing belief that if you call a problem by a European word, it will be ashamed to continue to exist. It will not. Poverty in general has a weak sense of tact.
A dependent territory can look very active. It can write strategies, participate in projects, open programs, hold forums, use funds, make repairs, put up signs with donors’ logos, demonstrate partnerships. But activity does not mean development.
Sometimes it is just a well-organized movement in a circle: the project is completed, the report is delivered, the facility is opened, the ribbon is cut, the photo is published – but the economic structure of the territory remains the same. People both left and are still leaving. Value-added has been going out, and it’s still going out. Business has not seen a serious production platform here, and it still does not. The budget has depended on external decisions and still does.
Here it is important not to confuse support with development. A transfer can close a hole. A grant can build a facility. A government program can repair a road. All of these things are necessary. But none of these solutions by themselves creates an independent economy of the territory.
A transfer sustains life, but does not bring back subjectivity. A grant improves an individual facility but does not assemble a productive system. A road can connect a territory to a market, but it can accelerate the outflow of people and money. A university can be a center of development, or it can be a pump to pump educated young people to where there are jobs. An agricultural base can feed a region, or it can feed someone else’s value-added if processing, logistics, packaging, branding and exports are outside the territory.
This is especially important for Moldovan neighborhoods and small towns. Many of them have retained resources but lost function. There is land, but no processing. There are people, but no jobs. There are buildings of former enterprises, but no production chain. There are roads, but they often function as outflow corridors. There are schools and colleges, but no economy that can retain graduates. There are local budgets, but they look more like a survival budget than a financial tool for development.
Therefore, the weakness of local self-government in Moldova cannot be explained only by bad mayors, small villages or the inability to write projects. These problems exist, but they are secondary.
The main problem is deeper: administrative units often do not coincide with real economic territories. Local authorities manage boundaries, but they do not manage flows. It is responsible for the locality, but it does not control labor markets, investment decisions, logistics, processing, major infrastructure links and the tax base.
As a result, the territory formally has authority but actually serves external decision-making centers. It could be Chisinau. It could be a ministry. It could be a donor. It could be a major buyer of raw materials. It could be a bank. It could be an external investor. It could be the labor market of another country where locals are leaving.
In each case, the mechanism is similar: decisions are not made where the consequences of these decisions live.
Extended responsibility with limited powers
The official administrative reform does aim to make mayoralties stronger. But the strength of local government does not come from the very transfer of powers. If a territory is left without its own economic base, without the right to gather projects around it and without the ability to retain added value, the new powers become an expanded responsibility for the previous weakness.
The problem is not just the volume of money, but the logic of its movement. A significant part of what is created locally first goes to the top and then comes back down in the form of transfers, programs and approvals. Formally, this is a budgetary procedure. In essence, it is a vertical of dependency. The City Hall is responsible to the people for the life of the territory, but the key decisions about resources, investments and development are not made where the consequences of these decisions live.
Therefore, it is a mistake to consider city halls mainly as providers of quality services to the population. Services are necessary: road, water, garbage, lighting, school, kindergarten, social infrastructure. But if the local government only serves current needs, it remains a communal administrator of the territory, not a subject of development. A quality service without an economic engine does not change the fate of a place. It only makes dependence a little more convenient.
For many territories, the solution cannot be found within a single mayor’s office. One administrative unit is often too small: narrow tax base, weak labor market, lack of specialists, limited opportunities for design and co-financing.
But several connected territories can form a real economic nexus if they are connected by raw material base, road, labor market, processing, logistics, education, tourism or access to foreign markets.
This is where the meaning of a development micro-region appears. It is not a new district, not an additional bureaucratic superstructure or another map drawn from above. It is a way to describe a real economic linkage of several territories that individually remain weak, but together are able to put together a project: processing, packaging, certification, agro-logistics, a tourist route, an industrial site, a training and production center or an energy solution for business.
The financial instrument in such a model is secondary to the function. It can be a common project fund, an agreement of several mayoralties, joint co-financing, participation of local businesses, diaspora or external partners. What is important is not the name of the mechanism, but the principle: the money should work for a specific territorial function, and the decision should be made by those who are connected with this territory and responsible for it.
For Moldova this is especially important because of the small scale of production. A country cannot win in volume. So it has to win by quality, specialization and depth of processing. Not just milk, but cheese, packaging, brand and market. Not just grapes, but wine, gastronomy, route and export. Not just fruit, but drying, juicing, certification and niche supply. Not just the road, but the link between producer, processor, logistician and buyer.
In this approach, mayoralties compete not just for transfer, but for the ability to assemble a territorial function. This changes the very nature of local government. The mayor ceases to be only a petitioner and becomes a participant in the economic construct.
But this is only possible when the territory is seen not as an administrative point, but as part of a living productive and social system.
Case. Comrat and Gagauzia: autonomy without an economic engine
This problem is especially visible where the formal status of the territory is stronger than usual. On the example of a small rural mayor’s office we can always say: small population, weak base, no personnel, objective limitations.
But Comrat and Gagauzia are important precisely because here the formal structure is much richer. This is not an ordinary peripheral mayor’s office.
Gagauzia has a special status. There is a People’s Assembly. There is an Executive Committee. There is a bashkan. There is an autonomous budget. There is its own political entity. There is Comrat as the administrative and political center of the autonomy. There is a university. There is a cultural identity. There are external relations. There is an agrarian base. There is a history of processing. There is symbolic capital.
And yet the main question remains the same: where is economic independence?
Comrat is convenient as a mirror precisely because it removes many superficial explanations.
We cannot say that the problem is only the lack of status. There is a status.
We cannot say that the problem is only the lack of institutions. There are institutions.
We cannot say that the problem is only the lack of political voice. There is a voice, sometimes even too loud.
But the economic function of the territory is not assembled. And when the economic function is not assembled, even autonomy begins to work not as an instrument of development, but as a more complex form of dependence.
The Gagauz autonomy was initially created, first of all, as a model of political settlement – a response to the conflict and a way to keep a complex territory within the state.
But political settlement and economic development are not the same thing. Political autonomy does not automatically mean economic subjectivity. It is possible to have your own authorities, but remain dependent on transfers, external projects, the raw material structure of the economy and decisions made outside the region.
The ATU budget is formed from its own revenues, transfers from the state budget of Moldova and external grants.
This structure itself explains a lot. A transfer is not just money. It is an attitude of power: the one who distributes it influences the behavior of the one who receives it.
A grant is not just money either. It is the inclusion of the territory in someone else’s agenda, sometimes useful, sometimes necessary, but not always coinciding with the internal logic of the territory’s development.
The central budget of Gagauzia for 2024 serves about 4,106 staff units. The transfer to the Comrat City Hall amounts to 719,4 thousand lei – an amount comparable to the cost of one small infrastructural object. Such a figure shows well the scale of the problem: the administrative system is in place, but the investment resource is extremely limited.
Why is the autonomous region becoming a stage for other people’s plays?
The agri-industrial sector accounts for up to 70% of Gagauzia’s GDP.
At first glance, this sounds like specialisation. But the real question is: how much of this value remains in the region, in what form is it generated, and who controls the supply chain?
If a region grows raw materials but does not control processing, packaging, branding, logistics, export channels and financial margins, it is not a fully-fledged agro-industrial centre. It is merely a supplier of the raw materials for someone else’s added value.
The region’s agricultural base is substantial: around 150,000 hectares of farmland, of which 26,000 are orchards and vineyards. But if processing is weak or carried out outside the region, the region remains trapped in the raw materials cycle. It produces the basis of wealth, but does not retain that wealth within its borders.
This is precisely why the employment figures appear so paradoxical: the agricultural sector may account for a significant share of the regional output, yet the employment rate in Gagauzia’s economy remains extremely low – 16.1%. For every person in employment, there are 3.6 unemployed. The sector generates value but does not generate enough jobs, because a significant part of the value chain lies outside the region.
According to the city’s own assessment, Comrat’s main problem is unemployment and labour migration. This is not a random social flaw, but a direct consequence of the economic model: there is status, there is an administrative centre, there is political autonomy, but the economic engine has not been put together.
Political autonomy without an economic base in such conditions may even heighten frustration. People see the institutions, hear the grand statements, witness conflicts with the centre, expect more, but in everyday life they face the same questions: where are the jobs, where are the young people going, why is business weak, why are incomes low, why are there raw materials but no wealth?
The higher the formal expectations, the more painful the clash with economic reality.
This creates fertile ground for political manipulation. When a region is economically dependent but symbolically isolated, it is easy to drag it into identity conflicts rather than discussing the structure of the economy. One could argue endlessly about language, geopolitics, the centre, external patrons, historical memory, symbols and status. All of this is important. But often it is precisely these disputes that obscure the main question: who controls the territory’s economic future?
If this question remains unresolved, political autonomy becomes a stage on which other people’s plays are performed.
For Comrat, the answer represents a very specific crossroads. It could remain the administrative centre of the autonomous region, subsisting on a combination of the budget, trade, agricultural raw materials, migration, political symbolism and external projects. Such a model could endure for a long time. It might even occasionally show visible progress. But it will not make Comrat a hub of development.
Another option is to build an economic function around modern agro-industrial specialisation. Not in the sense of a return to the Soviet canning industry of the past, but in the sense of a new value-added chain. Gagauzia should not simply be a territory where grapes, grain, sunflowers, fruit and vegetables are grown. It should be a region where raw materials are turned into products, products into brands, brands into exports, exports into revenue, revenue into employment, employment into the local budget, and the budget into new infrastructure opportunities.
The Potential of Political Status
This is when autonomy takes on real meaning. The People’s Assembly, the Executive Committee, the Bashkan, the Comrat City Council, the university, the business community, farmers, processors and external partners need not be isolated elements, but rather participants in a single economic framework.
Political status should be used not for an endless symbolic war with the centre, but for negotiations on a special economic package: processing infrastructure, agri-logistics, industrial sites, certification laboratories, export corridors, specialised educational programmes, energy solutions for processing enterprises, and tax incentives for those who create added value within the region.
If the structure described is not changed, the consequences for Moldova are predictable and already evident. Peripheral areas will continue to lose people. The cycle of decline will repeat itself: people leave – business shrinks – the budget shrinks – services deteriorate – the next people leave. Local budgets will remain dependent. Mayors will compete for transfers and grants, rather than for investors and production chains. Chisinau will continue to draw away talent, money and decision-making.
Concentration in the capital is already reaching a level at which the capital’s own market is beginning to falter: the cost of living is rising, infrastructure is becoming overloaded, and the quality of the urban environment is deteriorating. The country is gradually turning into an economy dependent on two sources of income: remittances from abroad and external donor aid. This is not a viable model of development. It is an organised form of stagnation with a veneer of European rhetoric.
When the number of people sending money home declines as the diaspora shrinks, and the flow of donor funds is redirected towards other priorities, Moldova’s periphery risks being left without both crutches at once.
Self-government without an independent economy is also dangerous in that it undermines trust in the very idea of local democracy. People vote, elect, demand, and wait for change. Then they see that the elected authorities are limited, dependent, impoverished, and forced to beg, seek approval, and wait.
Disappointment is directed at the local level: the mayor is bad, the council is weak, the councillors do nothing. Sometimes this is fair. But often the problem runs deeper: the institution is structured in such a way that it promises more than it is capable of delivering.
It is like handing someone the steering wheel of a car with no engine, and then scolding them for driving too slowly.
Therefore, a proper administrative-territorial reform should not begin with the question of how many districts to retain, but with the question of what economic territories actually exist in the country. Where are the real centres of employment? Where have industrial sites been preserved? Where is the raw materials base? Where is processing possible? Where do transport corridors run? Where are the labour markets? Where is there potential for cross-border trade, logistics, energy, agro-processing, tourism and education?
Moldova needs more than just administrative reform. It needs a functional development map. For each territory, it is necessary to understand not only the population size and budget size, but also the structure of employment, sources of added value, dependence on transfers, the share of public sector employment, migration outflow, the raw materials base, the remnants of industrial infrastructure, processing capacity, transport links, access to markets, educational resources and real investment constraints.
Only then can we discuss boundaries, powers and budgets. An administrative unit should not be a random historical remnant, but a managerial framework for a real economic territory.
Comrat illustrates the fundamental law of territorial development: status may give a territory a voice, but it does not provide it with a driving force. A budget may cover running costs, but it does not guarantee a future. A transfer payment may plug a gap, but it does not create self-sufficiency. A grant may build a facility, but it does not build an economy. A university may produce specialists, but without a labour market, it drives talent away. An agricultural base may feed the region, but without processing, it feeds someone else’s added value.
For Moldova, this is perhaps the main lesson. Local self-government without an independent economy is not local governance.
It is decentralised responsibility for centralised poverty.
Eugen Perestoronin,
journalist, economic and political analyst
Dmitri Taraburca,
economist, expert in real estate and territorial development
