CHISINAU The pro-Western bloc that has run Moldova since 2009 appeared headed for collapse on Wednesday after Prime Minister Vlad Filat denounced the founding coalition agreement and accused his allies of corruption.
The implosion of the three-party Alliance for European Integration could trigger a snap general election and slow the ex-Soviet republic's progress towards agreements on political association and free trade with the European Union.
Such turmoil could also hurt an economy already weakened by falling European demand for major Moldovan products such as wine and stall talks with the breakaway Transdniestria region.
Filat, leader of the Liberal Democratic Party (LDP) and prime minister since 2009, said on Wednesday his party would no longer adhere to the coalition agreement with its partners, the Liberal Party and the Democratic Party.
"LDP urges its coalition allies to review this document," Filat told reporters, saying Moldova was turning into an oligarchy run by a privileged elite.
"While we have been running the country, some have used their power as a cover for restoring communist-era schemes ... I can compromise, but not when it comes to...European values and fighting corruption," he said.
In particular, the coalition agreement splits important government positions in the nation of 3.6 million people between the three parties, an arrangement that Filat said needed to be excluded from a possible new deal.
Criticizing his proposal, Democratic Party leader Marian Lupu said: "(Our party) has already made enough concessions guaranteeing political, economic and social stability."
Last month, Filat called for the resignation of Prosecutor General Valerii Zubco, an appointee of the Democrats, after a local pressure group accused Zubco of involvement in the death of a businessman on a hunting trip and a subsequent cover-up.
In an apparent tit-for-tat move, state prosecutors in turn launched abuse-of-office investigations against finance and health ministers - both of whom are appointees of Filat.
Escalating the stand-off, deputies from Filat's party on Wednesday supported a move to strip an influential businessman and the Democrats' main financial backer of his post as first deputy parliament speaker.
With communists indicating they would not form a new alliance with Filat's party, the political dispute could trigger an early election.
PLAGUED BY RIVALRIES
The Alliance took power in 2009 after the communists, who had ruled since 2001, failed to muster a majority via election. Though it united all major non-communist groups, the Alliance's rule has been plagued by infighting, back-biting and stalemates.
Despite political instability, Moldova's legal reforms have won praise from the EU, which has launched negotiations with Chisinau on landmark association and free trade deals and said they could be signed in 2013.
The coalition government also achieved modest success in talks with the Transdniestria region, mostly on non-political issues such as restoring railway traffic. Transdniestria has been de facto independent since a brief war in 1992,
Moldova, one of the poorest nations in Europe with an average monthly wage of about $280, relies heavily on exports of goods including wine to the EU and remittances from its citizens working abroad, many of whom are in the EU. Growth fell to about zero last year due to a sharp decline in exports to Europe.
(Writing by Olzhas Auyezov; Editing by Richard Balmforth)