Breakaway region relies on Kremlin for 70% of its budget and motherland’s economic woes have left residents feeling the pinch, reports Eurasianet.org

Fifty-eight-year-old Veronica Zinici, a pensioner from the rebel republic of Transnistria, recently traveled to the Moldovan capital Chișinău for medical treatment. She also brought with her a tale of hardship.

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Zinici said she stopped receiving monthly pension supplements of 200 roubles ($3.16), courtesy of Russia, last summer. With lower pensions and “considerably higher” prices for food, utilities and medicine, life in the breakaway, pro-Russian territory is becoming increasingly difficult. “Luckily, we’re living in a village and we have vegetables, [and] fruits [planted] around the house and we can survive with that,” she said.

Zinici’s story is common in Transnistria these days. The region is home to a few hundred thousand residents, most of them ethnic Russians and Ukrainians. It declared itself independent from Moldova in 1992, when local separatists, backed by Russian military units, beat back the Moldovan army. Since then the territory’s survival has depended on the presence of Russian peacekeeping troops – and on Kremlin subsidies.

Now, as Russia wrestles with its own economic woes, the Russian government’s ability to underwrite Transnistria – along with other disputed territories such as Abkhazia and South Ossetia – is under increasing pressure.

Many believe that Russia has no choice but to decrease its payouts to the breakaway regions. In late January, the pro-Kremlin Russian daily Nezavisimaya Gazeta reported that Moscow refused to extend Transnistria $100m in assistance. It cited an anonymous source in Transnistria’s de facto legislative body, the Supreme Soviet.

The Russian government has not confirmed the report, but Moldovan experts believe it credible. Moscow has traditionally provided over 70% of Transnistria’s budget, according to estimates.

“Judging by the difficult economic situation and the continuous deterioration of [conditions in] the Transnistrian region, especially after the crisis from Ukraine and the collapse of the Russian rouble, the information seems plausible,” said Ion Tornea, an economic analyst at Chișinău’s Institute for Development and Social Initiatives, an independent think-tank.

Oazu Nantoi, director of the Institute for Public Policy in Chișinău, agreed: “The Russian Federation is in a multilateral crisis and it can’t allow money to be flung around left and right.”

But a senior Transnistrian politician said Moscow remains committed to helping the region – just not to the extent it once did. These days, gas is no longer supplied for free and pensioners cannot travel for free on public transportation, said Dmitry Soin, a member of the Supreme Soviet. Public-sector salaries were cut by up to 20% last summer, and pension supplements stopped.

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Soin warned that the loss of Russian aid on top of these cutbacks could “lead the unrecognised republic to an economic disaster.” Tiraspol already faces a $404m (4.48m Transnistrian roubles) budget deficit, based on its draft budget for 2015.

Meanwhile Transnistria is on the look-out for new revenue sources. As of March, cars registered outside of the territory will require a “green card” when entering. The fee-based cards will apply first to vehicles from the EU.

In the capital Tiraspol, reports are circulating that new taxes will be imposed on “those who do not study and do not work in Transnistrian institutions”, according to a family whose son goes to high school in Moldovan-controlled territory. The reports could not be independently confirmed.

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In a 12 February interview with the Russian state news agency Tass, Transnistria’s leader, Yevgeny Shevchuk, acknowledged that “the prognosis for our economy for the first half-year [of 2015] is negative”. Industries have suffered losses and, in some cases, stopped production, he added. Official figures show that exports to Russia were 3.5 times lower in January than for the same period in 2014; and trade with Ukraine and Moldova proper is also lagging.

Shevchuk claimed that residents understand that a “replanning” of Russia’s budget is underway. He offered reassurances that “humanitarian projects” would continue, but did not elaborate.

Some believe the EU could be a source of economic relief. Shevchuk said 30% of Transnistrian exports already go to the EU. But boosting trade with Europe would seem to require a policy realignment. The EU has lifted duties on goods from the territory, but the deal expires in January 2016. So far, Transnistria has refused to join the Deep and Comprehensive Free Trade Agreement, signed last year between the EU and Moldova.

“If, by the end of the year, Transnistria has not reoriented toward Europe,” thus preserving those duty-exemptions, it “would be a severe blow for textile, metallurgical and other industries from the republic,” said Soin.

The government in Tiraspol doesn’t hide the fact that it has a problem on its hands. It has announced an open competition to develop a five-year “anti-crisis” plan. The winner will receive a cash award worth $45,000, Tass reported.