Note #8 – August 2005                                                           CISR/ADEPT, www.e-democracy.md 

Transnistria’s Economy: Regional Dimension
by Galina Şelari

Fifteen years of Transnistria’s “autonomous” existence and development presents the event when the phenomena appeared as local confrontation between Moldova and Transnistria is overstepped the bounds of theirs bilateral relations – political, economic and others.

Traditionally, the international community (the Europe, USA, CIS, mainly Russia and Ukraine) participates and contributes to reintegration of Moldova through political adjustment of this “frozen” conflict, but, as usual, its economic component is remained in the shadow. From this point of view the OSCE Parliamentary Assembly’s Resolution on Moldova (July 2005) appealing to “all co-interested parties especially the Parliament and the Government of Moldova as well as Supreme Council and administration of Transnistria and the governments of Russia Federation and Ukraine together with OSCE to resume the serious negotiation in order to achieve the time-proof solution on Transnistria status” is not an exception. Meanwhile, new challenges, events and findings of the last years (2000-2005) imprimis shown up in aggravation of economic relations between Moldova and Transnistria (so-called “economic blockade”, realization of privatization process and theirs legitimacy in respect to Moldova, autonomization of the region’s infrastructure), put the economic component of the “Transnistrian issue” in the forefront afresh and clear. And this is the very component which brings the problem of Transnistria to proscenium and makes obvious its regional dimension.

During the last 15 years that is after 1990, and this should be mentioned especially, moldo-moldovan (RM-TMR) relations have changed within the wide compass – from the statement “you could do whatever you want and to trade with any partner” (including the use of customs stamps of the Republic of Moldova for legalization of TMR’s external trade) to continuous pressing and complication of export-import procedures for transnistrian enterprises. It is the paradox, but Moldova’s joining to WTO in 2001 (replacement of customs stamps) became the starting point for current economic confrontation between Moldova and Transnistria, and prospective in 2005 joining to the same organization of Russia and Ukraine - guarantor states and both Moldova’s and Transnistria’s main trade partners – is considered as the strong influence which could speed achievement of acceptable compromise in transnistrian settlement. The fact that and Moldova and Russia and Ukraine are involved in the EC “new neighbourhood policy” and are member states of regional organizations such as Black Sea Economic Cooperation, Central European Incentive (Moldova and Ukraine) is also very important.

That is why not only Republic of Moldova and Transnistria, but and Ukraine, Russia, the European Union and USA are also interested (or should be interested) in a faster and constructive settlement of the “Transnistrian issue”.

And the fact that now time Transnistria trades with almost all CIS countries, the majority of European Union countries and even with Australia and New Zealand, and African countries (Algeria, Egypt, Tunisia, Morocco, and South Africa) could be use as additional argument of such interest. The “seditious” region succeeded in establishing quite stable and, importantly, reliable relations not only with partners from CIS, but also with European countries (Germany, Italy and Romania). At that, and this is important, it found such mechanisms, which make meeting mutual obligations beyond the influence of external factors and restrictions.

A “breakthrough” of Transnistrian export to Europe, first of all to the EU Member-States also took place within last five years. As for export to the EU countries, its dynamics within the total TMR’s export is quite impressive: 2000 – 19.3%, 2001 – 23.4%, 2002 – 34.0%, 2003 – 32.2% and 2004 – 33.3%. For the reference’s sake let us note that share of Moldovan export to the EU countries was smaller over the same period: 2000 – 21.7%, 2001 – 21.3%, 2002 – 22.3%, 2003 – 26.7% and 2004 – 30.1%. Of course, one should take into account the differences in structure of Moldova’s export (70% – foodstuffs and light industry goods) compared to Transnistria’s one (metal-roll – about 60%, machinery and equipment, textile).

The specific feature of the region – its traditionally transit character is determined by geographical and economical situation of Transnistria (closeness to the Balkans, Danube and Odessa – Ilyichevsk, the largest commercial port of the Black Sea) and all countries of the region have had theirs own interest in this transit corridor, its economic component: Russia – to use advantages of transit through the region of natural gas and electric power (including producing by Moldovan power station, now owned by “Nordic Oy/RAO EES), Ukraine – from highly profitable and export-oriented production of metal-roll (from 2004 the Austrian-Ukrainian Hares Group is the owner of Moldovan Metallurgical Works – MMZ); the European Union - IX Trans-European transportation corridor runs via Dubasari and Chisinau.

Privatization in Transnistria – the process to which not only local (transnistrian) but and foreign investors concentrate theirs attention – is another important and very sensitive both with economical and political point of view “nerve-knot” of the regional interests

The growing number of foreign companies – the new owners of enterprises in Transnistria – introduces a new and quite important component into patchwork of the Transnistrian situation, and its “cumulative charge” with time will be only increased. Currently just foreign patrons investing in the same industries of both Moldova’s sub-regions contribute in practice to economic reintegration of the country. Investments in wine industry of “Aroma” Trade House (Russia), “Saliut” company (Russia) – instrument-making industry and WJ Group of companies (USA) – production of vegetable oil could be taken as obvious examples of such contribution.

Note: in Transnistria out of 37 privatized enterprises – objects of “large-scale” privatization – 11 are owned by external investors, of which Russia (4), EU Member-States (4) and USA (2).^[1]

Moldovan business society, but not at all because of economic reasons, officially does not take part in this privatization and is “satisfied” with status of an observer.[2] Meanwhile, the “inclusion” (participation in privatisation tenders) of economic agents from the right bank of Dniestr in this process could practically support the economic reintegration since it can:

·         promote free movement of capital,

·         make Moldova more attractive both for Transnistrian population (Moldova wants to invest but not to get their hands on the more lucrative enterprises of the left bank[3]) and foreign investors

·         develop environment to return Moldovan business and goods on Transnistrian market,

·         shrink the use of shadow and criminal business schemes and then the scale of the shadow economy as whole.

At the same time the existence of foreign investors in Transnistria brings and “customs conflict” out from the local frames: all enterprises from the left bank are suffered from complication of export-import procedures.

Transnistria’s attempts to divide and form an infrastructure “of its own”, independent from those of RM: transport, including railways, telecommunications, natural gas supply, etc. is another very important aspect of the issue.

Mutual economic inefficiency of such approach is evident: extremely limited financial resources (Moldova is the poorest country of Europe) are used to “neutralize” losses of mutual estrangement. Moldova has been promptly reconstructs the railway link Revaca – Cainari, while Transnistria tries to restore traffic along “its” part of the railroad and intends to include the railway in the state privatization programme. At that, state company “Railways of Moldova” exited 2004 with losses, and, besides of this, will be fully adapted to new conditions this year. The national railway company of Ukraine, in its turn, loses millions of USD due to impossibility to use the border railway station Cuciurgan (into reconstruction of which Ukraine invested more than USD 2 million). Transnistrian budget, by estimates, will get USD 2 million less also.

But instead of these “local losses” another very important regional issue appear – breaking of traditional transit traffics and regional transports coordination. Redirection of goods and passengers flows and using alternative ways roundabout Transnistria not only make transit time longer (additional 500 km.) but could have a negative influence on transit potential of Moldova as whole. And the first step is already done: starting from March 1, 2004 the Kiev-Chernovti train won’t enter the Moldovan territory. And one can await that and another trains from CIS countries will go to Danube-Carpathians region and Balkans through Chop to Trans-Carpathian and roundabout Tiraspol-Djurdjulesti.

Taking into consideration that today “Transnistrian issue” is in many respect in crucial stage of settlement, one could assume that neglect the economic component of the “issue” will only further postpone finding a mutually acceptable political settlement of the problem. That is why it will be vitally important to take into account economic interests both of the Republic of Moldova and Transnistria, as well as of their partners while formulating and making political decisions. And finally and international experts come to the same conclusion: “A reconstruction program for Transdniestria to be implemented after conclusion of a final settlement should be elaborated and publicised. Moreover, Transdniestrians should be assured that they could continue their legal business operations and that the region would keep its property and a fair share of the revenues collected on its territory.”[4]