By Steve C. Nicandros
For years, conventional wisdom has warned against investing in places betwixt and between – countries that offer uncertainty, that face geopolitical challenges, that aren’t prepared for Western-style business. Moldova, one of the poorest and smallest countries in Europe, was considered such a place.
Yet, in March, Frontera Resources Corporation signed a strategic declaration of cooperation with Moldova’s Prime Minister, Pavel Filip, to commence oil and gas exploration in the country.
Why would we do this? Because we believe in Moldova’s commitment to reform, in the capacity of the Moldovan people and in the possibilities to conduct meaningful oil and gas exploration. Growing our business there will boost the economy, strengthen Moldova’s ties with the United States, and diversify Europe’s energy sources.
And we have found the welcome much warmer than conventional wisdom would have you believe.
Situated between European Union and NATO member Romania and a dynamic Ukraine—itself progressing to reform and attracting investment amidst the ongoing challenge of Russian aggression—Moldova is strategically positioned within the eastern European countries of the greater Black Sea region.
In 2014, together with Ukraine and Georgia, Moldova entered into an Association Agreement with the European Union that set the stage for a new era of political and economic cooperation with the West. To wit, a NATO liaison office will open in the country later this year.
Mr. Filip’s pro-West government is moving forward with the implementation of EU-inspired reforms that will also bring it closer to the United States and toward embracing the vision of a prosperous and lucrative free-market economy. The EU agreement allows for a Deep and Comprehensive Free Trade Area (DCFTA) while also providing a framework for broad trade and legal reforms to meet EU standards for eventual market integration.
From an investment perspective, this commitment and its associated reforms make a compelling case for foreign direct investment in Moldova for years to come.
On the receiving end, Moldova’s government has shown itself to be aware of the potential that foreign direct investment can offer. Initiatives to open development across several sectors of the economy have resulted in companies entering the economy with new commitments for further investment and development.
This was evident when Frontera won an open tender to conduct oil and gas exploration in Moldova. The new contract represents the potential to achieve energy independence for the country and to promote energy security for its European neighbors, who are too often dependent on Russia for their energy needs.
We will bring to Moldova advanced and environmentally responsible technologies from the United States that have transformed it into the largest hydrocarbon producer in the world today.
Despite progress, Moldova’s European course has not come without its obstacles. The country’s geography has it positioned amongst opposing interests and ideologies between Russia and its western neighbors. Russian operations in Moldova, as in Georgia and Ukraine, are designed to frustrate reform and the prospect of European integration and transatlantic relationships.
These considerations, however, should not be permitted to move Moldova from its current path toward integration with the Western world. Moreover, a prosperous Moldova can only be a benefit to a vibrant regional economy.
This great effort on the part of Moldova’s government creates great opportunity. It will need to be paralleled by positive cooperation and unequivocal support from both the public and private sectors in Europe and the United States.
We hope we are at the vanguard of Western entry into Moldova’s warming market, heralding a new era of investment and interest in the country. We would welcome the continued growth of the private sector and the associated competition that will ultimately help the Moldovan government achieve its vision to become a prosperous and strategic European democracy that benefits all its citizens.
Steve C. Nicandros is chairman and chief executive officer of Frontera Resources Corporation. He also serves as a member of the International Advisory Board at the Atlantic Council in Washington, D.C.