index.1.jpg (3032 bytes) Note 15 – November 2003 

Moldova – Transnistria: Clash of Economic Interests
 by Galina Selari

Moldova and Transnistria agreed on the “common state” formula and 5 common spaces – legal, economic, customs, defence and cultural as far back as 1999. Further steps seemed a mere technical matter – documents’ development. 

But it turned out to be quite different from what was expected. Withdrawal of rights to use customs stamps of the Republic of Moldova from Transnistria “materialised” in the notion of “economic blockade”. Gradually increasing tension has been becoming stronger and stronger during 2003, in spite of the fact that the parties have, as before, agreed that reintegration is the single opportunity both for conflict settlement and ensuring of economic revival of the two sub-regions. To achieve this goal the elaboration of the Constitution of the united state has been started. Nevertheless, the nerve-strain can be compared to some extent with the situation that preceded the 1992 confrontation, but now, however, the proscenium is taken not by immaterial problems – language and history - but by economic interests focusing on whom the property belongs to and who will control the financial flows. That’s why the current aggravation of the situation represents no less danger than that that occurred in early 90s. 

Insisting on their own rights the parties seem to compete with each other in pilling up restrictions for the economic agents and population of the far bank. And this is happening notwithstanding the fact that as early as 1992 after the “heated” phase of the conflict it was agreed that “conflicting parties considered application of any sanctions or blockades inadmissible. In this context any barriers to free movement of goods, services and persons shall be eliminated”. 

Practices used during last months by both parties in order to ensure these economic freedoms have given rise to surprise. Let us bring them back to the mind: 

First act: spring – summer 2003 

·    May 15, 2003 – the Customs Department of the Republic of Moldova and the State Customs Service of Ukraine signed the Protocol on Mutual Recognition of Motor Waybills, Commercial and Customs Documents and, as a result, starting from May 25, 2003 the entrance of goods with Transnistrian customs documents to Ukrainian territory was ceased;  

·    June 12, 2003 – the Government of the Republic of Moldova introduced temporary (till January 1, 2004) registration of Transnistrian economic entities in corresponding Moldovan institutions. 

The Administration of Transnistria considered these as toughening of “economic blockade” and Chisinau’s pretensions to the sub-region’s property and took retaliatory as well as prohibitive, measures; 

·    July 1, 2003 – gas supply to the villages Malovata and Cocieri which are under the Republic of Moldova’s jurisdiction but are situated on the left bank of the Dniester was suspended on the grounds of arrears. 

·    July 14, 2003 – the Decree of I. Smirnov introduced a special customs duty at the rate of 100% of goods customs value for all commodities imported from the Republic of Moldova ; 

·    July 18, 2003 – the Decree on Establishment of Most Favourite Nation Treatment in Trade and Economic Relations with Ukraine was issued. 

Further, an utterly absurd situation based on reciprocal accusations of “jamming” has arisen and resulted, since the middle of September 2003, in the breakdown of telephone communications between Moldova and Transnistria causing considerable damage to the economic entities and population. Can we believe it is taking place in Europe?! 

Second Act – autumn 2003 

·    October 15, 2003 – the Government of the RM took the Decision to establish stationary customs posts in order to apply the customs control rules to goods brought from Transnistria; 

·    November 4, 2003 - the Transnistrian party suspended its participation in the sittings of the Joint Control Commissions. 

All these actions on “isolation” and “forcing to harmony”, etc. resulted in sizeable decrease in reciprocal trade between the sub-regions, the shift of economic entities from both sides of the Dniester to shadow economy and, as the consequence, activization of contraband and corruption. A seemingly unexpected surge of contradictions against the negotiation background arose to a considerable degree out of the fact that for the first time after 1992 the economic interests of so called elites – the old one and the new one – and certain “business groups” from both sides of the Dniester had been visibly damaged. 

As the secret came to light, revealing the domination of economic interests, it is time to liven the search for “common grounds” primarily in the field of economy. The problems which both Moldova and Transnistria are facing with are similar. And it will be logical to seek for the possible ways of their settlement together. 

The increase of the level of living standards and maintenance of sustainable economic growth are strategic goals for the both sub-regions. Reviving of real sector both in Moldova and Transnistria has been advancing slowly, thus the need of “second wave” of reforms both in industry and agriculture and social policy has come to a head. Moreover, both parties are facing with tough budget constrains associated with the necessity to maintain a social safety net while at the same time the burden of taxation needs to be reduced to encourage entrepreneurship and attract foreign investment. 

The situation is getting even more complicated if we take into consideration that for both Moldova and Transnistria the problem of external debt servicing is very acute and as a consequence brings about “twin deficit” in the budget and balance of payments. The problems like these are typical for many economies in transition but it could be easier to solve such problems within the frame of “common state”, involved in the stabilisation and reconstruction processes in South – East Europe. 

As time goes on the external factors can further contribute to a balanced and, what is most important, civilised conflict settlement. First of all it is related to the European Union enlargement to the East and surely to the new Neighbourhood Policy of the EU. If the Republic of Moldova will be the first-hand EU “neighbour” not earlier than 2007, Russia, Byelorussia and Ukraine will be neighbouring the EU as early as 2004. 

And what is more, now the concept of “common European economic area” is far more exceeding the frames of enlarged EU. It is mainly related with transformations of Russia’s and Ukraine’s relationships with European countries, strengthening and intensification of economic partnership. It is evident that such partnership will become stronger following theirs accession to the WTO and implementation of the Agreement on Common Economic Area signed by 4 largest CIS countries – Russia, Ukraine, Byelorussia and Kazakhstan – in September 2003. The fact that the same countries are both key and common trade partners for the two sub-regions of Moldova will undoubtedly affect relations between these countries and the “common state” and at the same time between the sub-regions. 

The “political and economic” tension between Moldova and Transnistria aggravated during the spring – autumn 2003 has negatively affected their reciprocal trade. According to the Transnistrian Republican Bank data the share of the Republic of Moldova in total Transnistrian external trade has reduced to 9% (the lowest indicator over the last years). It is interesting that the most sizeable decrease was registered in Moldova’s inflows to Transnistria but at the same time the opposite flows of goods to Moldova even increased by 24%. And Transnistrian export growth to Russia and Ukraine amounted to 300 and 84%% correspondingly. It is also interesting, that according to the social and economic forecast of Transnistria for 2004 Russia and Moldova will remain the main Transnistrian trade partners within CIS (38.5% of total external trade turnover). And this is observed under circumstances in which the favourable conditions were created for Ukraine – products imported from this country are not subject to customs duties, excisable goods being the only exception but Moldova’s ones are subject to special 100% duty. 

A way out of the current situation which considerably damages both Moldova’s and Transnistria’s economies can be found solely by means of a mutual compromise including that on economic problems solutions. It seems that this compromise should be realised during the initial stage of transition period of reintegration and this point was set up in the draft agreement on settlement proposed by OSCE (July 2002, Kiev) but has never been realised. 

The attempts to de-block economic “obstructions” through official negotiation process have been to no effect for the time being. So, involvement of entrepreneurs and non-governmental organisations in discussions of economic aspects of Moldova – Transnistria relations would be in favour. These aspects are much spoken of: property, privatisation, financial flows, customs procedures, registration and taxation, free movement of persons. 

Why not to discuss the possibility for the parties to sign the document in which it will be stated that until the Constitution of “common state” is approved: 

·    respectful attitude to the property in the territory of the both sub-regions based on mutual guarantees of efficient use and management of the property with consideration of each parties interests and interests of the future “common state” will be guaranteed; 

·    economies of the two sub-regions will operate during the transition period within the framework of existing legal environments namely those of the Republic of Moldova and Transnistria. 

It is understandable that these suggestions are to be discussed. But theirs acceptance could in many respects defuse the current situation, mutually undermining and often absurd.