The significance of the Transnistrian conflict is derived from three basic factors. The first is putting an end to the standoff between the Republic of Moldova and the unrecognized Pridnestrovian Moldavian Republic (PMR) by resolving political status issues and bringing about political stabilization in the region. Second is the potential creation of an additional instrument to help solve the Ukraine crisis and normalize Russia–Ukraine relations. Third is the potential impact of the Transnistria conflict on relations between Russia and the European Union. The latter has a special interest in minimizing instability in regions close to its borders.

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After the armed confrontation on the Dniester culminated in the July 21, 1992 signing of the Agreement on the Principles of Peaceful Settlement, the Transnistria problem was pushed to the political margins for a considerable time.

However, in the last two years it has come to the forefront as an important element on the international agenda in the context of the Ukraine crisis and sharpened confrontations between Russia and the West in the post-Soviet space. In addition to the deteriorating geopolitical situation for the PMR due to the Ukrainian blockade, since January 2016 there has been a threat that the European Union may lift (or change) its trade preferences for Transnistrian goods, which could greatly aggravate the socioeconomic situation in Transnistria. At the same time, however, the preservation of these trade preferences squarely ties the PMR economy to those of the European Union and Moldova. Meanwhile, the United States, the European Union and the OSCE – observers and mediators in the peaceful settlement process – are turning a blind eye to the actions of Ukraine, which is violating its status of guarantor nation by isolating Transnistria (by building defense fortifications and making it more difficult for Russian citizens to cross the Ukrainian border).

A Unique Conflict

The Pridnestrovian Moldavian Republic and the Transnistria conflict have some unique features.

First, the conflict between the unrecognized PMR and the Republic of Moldova arose without a pronounced ethnic component. The consolidation of the Transnistrian people occurred on an inter-ethnic and anti-Romanian basis. It developed in the absence of an ethnocratic leadership and an official declaration of “leading” ethnic groups, and maintained a state building approach. The process of Romanianization on the right bank of the Dniester in 1988–1989 triggered a civil conflict. The Moldovans in Transnistria who feared Romanianization backed the creation of the Transnistrian state.

Second, the armed conflict that ended in August 1992 was far smaller in scale compared to confrontations in other parts of the former USSR (for example, in the Republics of Transcaucasia and Tajikistan). It produced no refugees.

Third, in spite of mutual mistrust, setbacks in and even suspensions of the negotiation process, the parties to the conflict maintained bilateral contacts on a fairly high level, as compared to any other format of relations between the de facto entity and Chisinau.

Fourth, Transnistria does not have a shared border with Russia, a country that supports it. It does, however, have a border with Ukraine. In spite of the tensions between Kiev and Moscow, the PMR has managed to maintain their cooperation in the peace process, with both Russia and Ukraine as its guarantors, as well as cooperate with the United States, the European Union and the Organization for Security and Co-operation in Europe (OSCE).

Thus, in 1992–2014, despite occasional outbursts of political confrontation, followed by more peaceful periods of hope for a final settlement, the situation in Transnistria remained largely stable. Thus this status was regarded as a kind of durable resolution, and the whole situation a near model of “frozen” conflict. The presence of Russian peacekeepers in the region deterred the use of force by Moldova and its Western supporters and in addition bolstered Moscow’s political influence.

However, the outbreak of the Ukraine crisis has given the problem of Transnistria a new meaning and greater political significance.

Transnistria: Positions of the Main Players

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Russia

Traditionally, Russia has played a multifaceted role in the Transnistria conflict. On the one hand, it was involved in the negotiation process of a settlement understood as not a victory for Chisinau, but rather a political compromise between the conflicting parties. On the other hand, Moscow saw pro-Russian Transnistria as an outpost for its interests, a counterweight to the attempts of the United States and the European Union to minimize Russia’s influence in the post-Soviet space and to ensure European security. The PMR was seen as an instrument to prevent rapprochement between Moldova and NATO and to keep Chisinau neutral. As a result, a repeat of the Abkhazia–South Ossetia scenario was rejected in favour of a status quo in Transnistria.

The sharp deterioration of relations between Moscow and Kiev has created serious problems for Transnistria in terms of transportation logistics, politics and economy. The Kremlin fears an “unfreezing” of the conflict, which could entail a military confrontation and a collapse of the negotiation process, since Russia would be forced to react assertively and therefore expose itself to additional risks, ranging from economic sanctions to armed engagement. Under the new conditions, Russia seeks to leave some room for maneuver, tailoring its actions to possible moves of the “5+2” partners.

Ukraine

During the process of political settlement, Kiev’s position flip-flopped between political mediation and economic pressure on Transnistria to force it to reintegrate with Moldova. Today, however, Kiev perceives the PMR as a pro-Russian enclave that Moscow may use as a bridgehead for an attack on the southern regions of Ukraine. Kiev’s resultant actions aimed at isolating the PMR and weakening its ties to Russia have had negative consequences for the economic and socio-political situation in the unrecognized republic, which can only be mitigated by continued preferential treatment of Transnistrian goods shipped to the European Union.

One sign of the new trend in the relations between Ukraine and Transnistria is the appointment of former President of Georgia Mikheil Saakashvili as Governor of the Odessa Region. The appointment has implications beyond the Transnistria issue. Saakashvili is a symbol of American influence in Ukraine, and his appointment as the head of a key region is an indicative and significant Ukrainian move. Its repercussions were felt in Transnistria, whose leadership saw as a hostile act the appointment of such a controversial political figure to head a neighbouring region of Ukraine. Evidently, the Transnistria problem helps the Ukrainian authorities keep up the image of the Russian threat. Moreover, the actions of the Ukrainian side are aimed not only at Transnistria, but also at Russian troops and peacekeepers stationed in the region.

Moldova

Despite differences among parties in Moldova, there is a consensus within the country’s political elite with regard to Transnistria, in spite of the sharpening divisions within the Moldovan establishment (between the ruling pro-European coalition and the left, represented by the communists and socialists). Even the political forces thought to be pro-Russian, such as the Socialist Party, are at most in favour of the federalization of Moldova .

A change of power in the Republic of Moldova is unlikely to bring about fundamental changes to the country’s foreign policy or the settlement of the Transnistria conflict. However, unlike Kiev, Chisinau is interested in preventing a showdown with Moscow. This is due, firstly, to the existence of a broadly pro-Russian electorate (those who vote for the left do so to a large extent because they want to see an improvement in relations between Russia and Moldova), and secondly, to the wish to prevent an aggravation of relations with Gagaúzia, which is in favour of Eurasian integration. Even so, the steady pro-European and “unionist” stance would not allow any, even a hypothetical left-wing, cabinet to make an about face and renounce coordination of its actions with Kiev or its backers, the United States and the European Union.

The United States and the European Union

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Transnistria is not a priority for Washington and Brussels these days. The West supports the “reintegration of Moldova” and its territorial integrity. At the current stage, it prefers indirect pressure when the rhetoric about Russian “revisionism” in the post-Soviet space is advanced by claims of expanded integrating links with Moldova. Today, neither Washington nor Brussels want to dump the “5+2” format. They invoke it, which means that a common political stance has been worked out. No party, for various reasons, is apt to raise the stakes in a contest of influence. The European Union and the United States are ready to let go of the Transnistria situation, considering that the crisis is forcing Tiraspol to seek an agreement with Brussels and Chisinau. Moscow, for its part, is holding its trump card (recognition of the PMR) close to its chest until the conflict escalates.

The European Union has changed its approach to the Eastern Neighbourhood countries, emphasizing the need to prevent destabilization close to the European borders, enhance security along these borders, and stop the Union’s enlargement.

The Official Journal of the European Union announced that, as of January 1, 2016, all economic agents in the Republic of Moldova, including the Transnistria region, export goods to EU countries on the same free trade basis. The two-year negotiations on the issue were successful: trade between Transnistria and the European Union will continue. The Transnistrian authorities agree to a two-year transitional period, after which the new trade regime – similar to the one that the European Union has with Moldova – will come into effect. Goods arriving from Europe will not be subject to customs duties, while Transnistrian producers will have to provide certificates with information about where goods came from and comply with the EU requirements on food security. The losses in customs revenue will be offset by the introduction of VAT. The agreement with the European Union is likely a forced step, as external factors— including isolation from Ukraine, physical distance from Russia and decreasing trade volumes with that country, as well as the marked changes in structure and flow of exports that took place during the grace period— made its prolongation crucial and even necessary.

Romania

With regard to Transnistria, Romania has been more active than any other EU member country. Under President Traian Basescu (2004–2014), the thesis positing a single Romanian people artificially divided by the Molotov–Ribbentrop Pact and thus a contemporary need for reunification under the aegis of the European Union, was promoted by the media.

However, Bucharest has adjusted its priorities under the new president Klaus Iohannis. Instead of promoting the idea of “great unification”, the Romanian authorities have set about building up economic links not only with the Republic of Moldova, but also with the unrecognized PMR. According to the State Customs Committee of Transnistria, since the beginning of 2015, Transnistrian enterprises have shipped $170 million worth of goods to the European Union, half of which went to Romania. For comparison, it has shipped a mere $42 million to the countries in the Eurasian Economic Union, with Russia accounted for $39 million of that figure. It should be added that Romania’s approach is changing under strong influence of the European Union. Following the events in the Middle East that have triggered the flow of migrants to Europe, Brussels does not welcome any changes in the proximity of its borders.

The idea of unification certainly does exist, and not just in theory, but also as a concrete project. However, this project clearly cannot be realized in the medium term, never mind by 2018 (the 100-year anniversary of Bessarabia becoming part of Romania). A plan was presented in Brussels on February 18 – a strategy for unification that was prepared by the National Liberal Party of Romania (PNL) led at the time by Klaus Iohannis before he was elected President. The project envisages the creation and development of a cultural, socioeconomic and informational space. In the context of creating such a strategy, Iohannis’ statement— that the issue of unification can only be broached after the situation on both banks of the Prut is more stable (which in Romania’s case refers to economic conditions)— is rather interesting.

In the context of mutual rapprochement, Romania will provide Moldova with the first tranche of a concessional loan in the amount of 60 million euros of a total loan of 150 million euros to shore up its budget after the country takes its first steps towards implementing the promised reforms and approving the Road Map with the International Monetary Fund. In order to receive the first tranche of the loan from Romania, Moldova must meet the conditions relating to improved governance in the banking sector, ensured independence of the courts and an approved Road Map with the International Monetary Fund.

OSCE

At the present time, the resources of the OSCE, which is acting as a mediator in the conflict, are exceedingly limited. Its mandate is built around a comprehensive settlement of the conflict based on the territorial integrity of the Republic of Moldova, giving special status to the PMR, and its recognition by the people of Transnistria. This position was reaffirmed at the OSCE Ministerial Council in Belgrade on December 3–4, 2015. Settlement was identified with ensuring Moldova’s territorial integrity, without firm guarantees of the interests of Russia and the people of Transnistria. The legal aspects of the “special status” of the PMR still need some clarification.

Meanwhile, the past two years have brought a number of new factors to the conflict: a marked change of the de facto situation on the border between the PMR and Ukraine; the changed role of the Ukrainian state in the settlement process; continued confrontation between Kiev and Moscow, and between Russia and the West.

All these factors combined, and taken individually, greatly complicate the resolution of status issues. As a matter of fact, the complexity has turned the OSCE from being an effective mediator, into being instead a mere transmitter of information on the positions of the parties. If these positions are considered outside the context of normalization of relations between Moscow and Kiev, as well as outside the normalization of those between Russia and Ukraine, the European Union and the United States, it turns out that they are practically incompatible with each other.

The Pridnestrovian Moldavian Republic: Internal Challenges

The evolution of the Transnistria problem has been accompanied by complicated internal developments inside the PMR.

First, the republic is living through a serious economic crisis caused by objective factors (lack of full recognition and integration into the world economy), as well as subjective ones (isolation that increased with the start of the Ukraine crisis). For the first ten months of 2015, the economic decline in industry, which gripped 8 out of 10 industrial sectors, amounted to 16per cent in dollar terms. The decline was particularly steep in the steelmaking and construction materials industries. Debts are growing, and it is impossible to cover the budget deficit out of the so-called gas account. GDP dropped by 19per cent in 2015, much more than in Ukraine. The economic outlook is fairly bleak. The industrial optimism index is very low; representatives of the real sector expect a further slump and for the conditions of their production units and enterprises to worsen.

Russia, which is rendering colossal financial and technical assistance to the PMR, has started to lose ground in a number of key areas. A paradoxical situation has emerged: on the one hand, Transnistria’s economy and infrastructure depend on Russia; on the other hand, Russia’s share in the PMR’s trade, as witnessed by export and import figures, is falling. In 2011, Russia accounted for 23.6 per cent of Transnistria’s exports and 46.3 per cent of its imports. Its trade surplus in the region dropped by 24per cent in the first half of 2015. Exports were down 20per cent, and imports 25per cent, on 2014. Half of the goods from the Transnistrian region are sold on the right bank of the Dniester in Moldova. At the same time, the export of products from Transnistria to Romania is nearly double the amount of exports to the Russian market. In March 2015, the PMR introduced a special procedure for paying wages and pensions in the amount of 70per cent of the due and payable sums (the rest is considered to be arrears). The withdrawal of big Russian business from Transnistria is an important indicator of the future status of the republic.

Second, another serious risk for the PMR, on top of its dire economic situation, is the state of its elites. Today, the republic is ruled by an elite, which grew up professionally, and psychologically, during the years of de facto independence. For them, the future of the region and its statehood is a special issue that is important in itself, even outside its Soviet past context. However, there is a rift between the Sheriff Group, the biggest holding of private companies in Transnistria that generated 52per cent of the PMR’s aggregate budget in 2014, and the administration of President Yevgeny Shevchuk. The rift widened just before the elections of the Republic’s Supreme Council. As a result of parliamentary elections, the opponents of the incumbent president won a majority in the legislature. The President’s Revival party thus suffered a serious setback.

Considering the current situation, events may develop in one of two ways. Under the first scenario, Sheriff will put forward and secure the appointment of its prime minister and then coordinate the presidential candidacy with Moscow, while Shevchuk serves out his term. Under the second scenario, Moscow, by agreement with Yevgeny Shevchuk and Sheriff, will propose its own candidate for prime minister. Impeachment is a possibility, but not any time soon. The parties may try to find a compromise and preserve the current political configuration with a new prime minister and the old president, who has lost a key political battle for parliament, until the next presidential election. However, we should bear in mind that the new members of parliament (from the opposition) and the new prime minister will face a considerable challenge because of objective factors, above all the grave economic situation.

The Future of Transnistria: “Freezing” Or “Unfreezing?”

As of today, events in and around Transnistria may develop according to one of three scenarios.

1. Integration.

A fundamental agreement between Russia (which is interested in having sanctions eased and restoring relations with the West) and the PMR on one side, and the United States, the European Union, Ukraine and Moldova on the other, would pave the way for the incorporation of Transnistria into a single Moldovan state. However, the following conditions must be observed: the country’s neutrality, non-bloc status and independence from Romania must be preserved; and guarantees of the power and business interests of the present-day elite in Transnistria, including influence in shaping a common foreign policy, must be provided. This scenario, if implemented, would, in theory, enable Russia to simultaneously wield great influence on Moldova’s domestic politics as a whole and link these factors in its relations with the West in other areas in the post-Soviet space.

This scenario, however, has several flaws.

First, the Moldovan elite is categorically against the transformation of its state project into a federation, while for Transnistria, “broad autonomy” is too minimal a starting point, even for a theoretical discussion of integration.

Second, the lack of trust between Russia and the West prevents them from acting in concert, and thus both parties’ confidence in the initial agreements is put into question. This is particularly true of the neutrality of Moldova. Traditionally, the West has encouraged the post-Soviet countries to join NATO, arguing that such a course is their unalienable right, regardless of Russia’s interests and fears.

Third, unlike the “People’s Republics” of Donbass, the PMR has 25 years of experience building its own identity and existing as an entity that is separate from Moldova, even in the absence of recognition.

Fourth, the United States and its allies see the process of settling the Transnistria conflict as a minimization Russian influence (especially its military influence) on the Dniester and in the post-Soviet space as a whole. And they are not prepared to discuss in a substantive manner the compensatory mechanisms in the event that Russia agrees to actively assist the integration of Moldova and Transnistria. In this process, the interests of Russia and the PMR are regarded as an inherently important, but rather destructive factor that impedes the quick Europeanization and democratization of Moldova.

Given this set of issues, “a large deal” on integration is problematic, even if Transnistria, seeking to minimize the harm caused by the crisis, intensifies pragmatic interaction with the European Union in defiance of the Kremlin’s tough directive. That said, the scenario may be implemented, but not in the short term, and only if relations between Russia and the West are fully normalized. At present, the chances of this coming to pass are slim.

2. “Unfreezing” the Conflict: Possible Options

If “unfreezing” is interpreted as attempts to change the format of peaceful settlement, then this process began much earlier in Transnistria than 2014 (in at least 2006, when Kiev and Chisinau forced Tiraspol to register its products as Moldovan to gain access to foreign markets). The start of the Ukraine crisis deepened the isolation of Transnistria. So far, however, such attempts have been limited to the socioeconomic sphere.

Moldova’s resources are far more limited than those of Transnistria. This is a unique case in the post-Soviet space, where the “mother country” looks weaker than the breakaway territory. If force were used against the PMR, Ukraine, whose resources are greater than those of Moldova, would greatly multiply the risks in Donbass. And the situation there, although showing some signs of de-escalation, is not quite yet “frozen”. For the West, economic pressure on Transnistria is currently the best option.

Thus, a repeat of the Transcaucasian scenarios on the Dniester is unlikely. But if that does happen, Moscow will most probably revise its approach to Transnistria (non-recognition as an independent state, but recognition as a party to the conflict and a party to the negotiating process) and may recognize the independence of the PMR.

However, a more probable scenario is “soft unfreezing” in the shape of increased integration cooperation between Chisinau and the West and attempts to create an attractive image of Moldova, which has chosen the European Union over Russia. These actions may be accompanied by demands for final compliance with the terms of the OSCE Istanbul Document of 1999 on the withdrawal of Russian troops from Transnistria, while peacekeeping forces would be criticized and the activities of the Joint Control Commission would be openly or tacitly sabotaged [33]. All these factors could, if not bring about an armed confrontation then put a wrench in the works of the negotiation process. We cannot rule out the fact that peaceful settlement could stagnate and the talks themselves could be suspended. However, if the dynamics in Donbass and other parts of the post-Soviet space improve and the confrontation between the West and Russia eases, the pause in the negotiations may be replaced with a resumption of the peace process, something that has happened in Transnistria before.

3. No Integration, No Independence

Today, neither Russia nor the West seek to bring about an abrupt change in the current balance of forces in Transnistria: on the one hand, there are no attempts to repeat the Crimean scenario, and on the other hand there are no attempts to use force to “gather lands back together” while the parties to the conflict are not prepared to sever relations completely. Therefore, the most likely outlook is to preserve the “suspended” status of the PMR and continue negotiations without much hope for an early breakthrough.

This scenario has its positive sides – ensuring peace and a balance of forces in the region – but it looks problematic without stronger Russian economic influence in Transnistria, and with Ukraine’s increasingly confrontational mood over the PMR. Changes in Moldova’s foreign policy (renunciation of neutrality and a final choice in favour of joining NATO) set additional obstacles in the way of implementing this model.

Recommendations

Right now, it is critical for Moscow to continue playing an active role in the settlement of the Transnistria issue. This ensures its influence in the region as a whole and has an indirect bearing on relations with the West. And this is a significant, if not a priority, policy direction. The Russian leadership cannot afford to ignore the new challenges (the change in Ukraine’s approach to the PMR, expanding cooperation between the European Union and Moldova) and the worsening internal problems in Transnistria and rely on rhetoric about “eternal friendship”, ”kindred spirits” and “Eurasian values.”

For all these reasons, it is vital that Moscow play an active role in Moldova (keeping in mind the Transnistria issue), i.e., it must interact with various political forces in that country. However, the Moldovan political field today is highly volatile, with new platforms and groups appearing all the time. However, even taking into account the loyalty of the Socialists and the supporters of the populist politician Renato Usatii, Moscow should not take a one-dimensional view of the situation. This way, it will avoid the mistakes that were made in assessing former Ukrainian President Viktor Yanukovych (he was mistakenly seen as “pro-Russian”).

With regard to Transnistria, in consideration of growing economic difficulties, Russia should identify, together with the PMR leadership, the spheres of possible interaction with the European Union and the spheres in which such interaction is premature or unacceptable. It is also necessary to optimize the format of economic aid to the republic. Failure to do that, in addition to the mounting migration problem and the fatigue caused by the persistent economic crisis may lead to a more critical perception of Russia’s role in the region.

With regard to Ukraine, much would depend not on the PMR factor but on the settlement of the Donbass conflict. A “freezing” of the conflict in South-Eastern Ukraine would ease tensions on the de facto border between Ukraine and Transnistria.

Development in Donbass would go a long way in determining the attitude of Russia and the West to the settlement of Transnistria. In that regard, it is highly important to preserve the “5+2” format and maintain the negotiation process, even if it does not yield tangible results in the near future.

One of the most important issues is the problem of economic cooperation between Russia and Transnistria, as well as between the Eurasian Economic Union and Transnistria. The Transnistrian economy is in dire straits. The pricing policy of previous governments had mostly negative consequences, which persist into the present. And, according to the project, the government’s budget deficit is greater than 1 billion roubles. The preferential trade regime is not a panacea, however. It is, of course, an important measure for minimizing the crisis that has taken hold of Transnistria. In the short and medium term, this economic vector does not weaken the political orientation towards Moscow. In the long term, should relations between Moscow and the West normalize and cooperation in the 5+2 format continue, then an economy that is oriented towards both the East and the West could have a big hand in transforming the region into one of cooperation.

More than political will is needed to build such a configuration, however. Comprehensive work to correct the mistakes that were inherent in economic relations between Transnistria and Russia is also required. Industrial cooperation needs to be developed – production that is based on those sectors of Transnistrian industry and agriculture whose products may be in demand in Russia, particularly in terms of import substitution. With limited investment opportunities because of the economic crisis and the sanctions regime, it is important to develop direct cash infusions, build up industrial cooperation (primarily at the international level) and set up joint ventures— Russian economic agents with a high degree of involvement from the Transnistrian side. This means that Transnistria must ensure that the policies of various government branches are coordinated with regard to finding a way out of the financial crisis, raise the quality of economists in the country significantly, and implement policies to support exporters, on whom the welfare of the republic depends to a significant extent.

Source: RIAC