Alexandru Ursu did his bit to bridge the political divide across the river Dniester. A Romanian-speaking cop from Moldova, he bought an apartment across the border in the breakaway Russian enclave of Transnistria. To understand why that turned out to be a bad idea, you need a quick geography lesson.

From 1940 to 1991, Moldova was the Romanian-speaking republic in the USSR. In 1992, after it had declared independence from Russia, a civil war broke out, creating Transnistria on the east bank of the river. It has no status under international law and, as Alexandru discovered, the rule of law itself is scant.

Last week Nato's commander in Europe named Transnistria the next flashpoint between Putin and the west. It is home to 2,000 Russian troops and an arms dump that could, if called for, resupply an entire army of Russian troops, should it make the journey across neighbouring Ukraine. That's what the generals are worried about.

I visited Transnistria last week, filming without permission, with an edgy driver in a beat-up car, telling the border guards I wanted to see a football match. The first clue that the picture would be complicated came at the Moldovan border village of Bulboaca. Like much of Moldova, it is a poverty-stricken landscape of tumbledown shacks, crumbling apartment blocks, dogs, chickens, kids and old women. "It was better in Soviet times, believe me," said one of the women. "It is better in Transnistria," said another. Twenty years of orientation to the west has left Moldova the poorest country in Europe, with one third of adults in villages like this working abroad.

To cross into the Russian enclave you go through three checkpoints, manned by the Moldovan police, the Russians and the Transnistrian army itself. Despite this high security, the enclave has been named a major centre for organised crime, with tobacco- and alcohol-smuggling top of the list, and money laundering alleged. But – and here's what the geo-politicians tend to ignore – it is tangibly better-off.

Yes, there are monuments to Lenin. Yes, the supreme soviet is dominated by a political party aligned to a football club. But what's important to the women in headscarves in the estate I visited, once you get to -30C on a winter's night, is the gas price. Thanks to Vladimir Putin, it is negligible. Pensions are higher than in Moldova. And there is employment: the army pays $300 (£180) a month and sustains a military-related economy.

So while the west thinks of this as a rogue, crime-ridden military outpost, in the region itself there is an upside. While I was there, a village across the border in Moldova even held a demonstration demanding to be allowed to join the Russian side.

While there are language issues – Romanian schools in the Russian enclave are being harassed by the authorities and pressured to close – the real battle is economic. "Putin cares about us" was the theme of conversations I had on both banks of the river, while "Europe could not give a toss".

Alexandru Ursu's case shows the stakes for individual people. In 2007, the flat he had bought inside Transnistria was seized by the police. They claimed he had duped the seller. They threw him in jail, suffocated him with a gas mask and beat him so badly that he was hospitalised. They forced him to sign a confession and he spent three years in jail. "The flat was occupied by the policeman who arrested me," he says. He was released after international pressure and his case is currently before the European Court of Human Rights.

The jails are full of people trying to scrape together 100,000 rubles (£1,700) to pay what is effectively a ransom to get them out, he alleges.

I stood on the bank of the Dniester thinking about the 150,000 Red Army casualties in the operation to cross here in 1944. If this is to be a new cold war, and the river a new Berlin Wall, then the west needs to know what the stakes are. For men like Alexandru, and others still trapped in Transnistrian jails, a diplomatic freeze would be the end of western leverage. Putin's call on Sunday for the regularisation of the enclave's status would, paradoxically, put human rights on a more stable footing. Moscow's standard response to petitions from people jailed there is "we don't control it".

On the Moldovan side, where the grey flag of poverty trumps all other symbols, Europe needs to decide what its offer is. It's likely Moldova will be given a security guarantee and drawn more into the EU's orbit. But "send your daughters to sweep our floors while we destroy your way of life with agribusiness" never sounds great anywhere. Here, on the new faultline of Europe, they will have to come up with something better.

Paul Mason is Culture and Digital Editor, Channel 4 News. His report from Transnistria will be shown on Tuesday 1 April at 7pm.

• This article was amended on 1 April 2014 to correct the number of Red Army casualties in the operation to cross the Dniester.