Isolated from Russia and marked by an economic crisis, Transnistria is forced to accept measures from Chisinau that it would have otherwise ignored. Tiraspol clings to an aggressive rhetoric, but doesn't really have many options at hand.
The quality of life in the Transnistrian region has been in constant decline, and the cause of this situation is the Russian military invasion that has cut off Transnistria’s main economic corridor to the Ukrainian port of Odesa.
However, the regime in Tiraspol is trying to transfer to Chisinau the responsibility for the consequences of the war waged by the Russian Federation and for all the economic issues facing the region. At the same time, Moldova sees the window of opportunity that is open at this moment and is trying to take small steps towards the reintegration of the secessionist region after the 1992 Dniester War.
Isolated from Russia due to the war in Ukraine, Transnistria is forced to pay taxes just like the rest of the Republic of Moldova
When the war started, Ukraine closed the border with Transnistria, and since then Moldovan authorities have completely controlled the flow of goods and people in the region, which never happened after the separatist region de facto broke away from the rest of the Republic of Moldova. The new circumstances have created a huge advantage for Chisinau in the negotiations with Tiraspol, according to Tiraspol political analyst Nikolai Kuzmin.
On January 1, 2024, a new Customs Code came into force in the Republic of Moldova to harmonize the local legislation with the European one (community acquis) in the field. The new Customs Code has been updated in such a way as to offer companies more benefits, digitized services and less red-tape, Chisinau says.
As the new Customs Code came into force, the exemptions in place before that were repealed, and now companies based in Transnistria will also have to pay customs taxes to the budget of the Republic of Moldova, although incomparably lower than those paid by companies on the right side of the Dniester. Previously, Transnistrians did not pay any import-export tax for their products, although the law required those who were carrying out foreign trade operations to register in Chisinau.
The Office for Reintegration within the Chisinau Government has specified that the change in the regulatory framework for companies in the Transnistrian region aims to gradually include these companies in the single economic and commercial space of the Republic of Moldova and to ensure fair competition for all companies that operate in the Republic of Moldova.
"Since the beginning of 2024, the Moldovan authorities have canceled the exemptions related to the payment of customs duties for companies based in Transnistria. Now they pay for traded goods just like the Moldovan companies. Tiraspol complains of economic pressure, as companies used to pay only to the Transnistrian authorities, and now they will also have to pay to the Moldovan authorities, which will affect the GDP of the region, and which will also mean a drop in the revenues to the local budget [of Tiraspol] which has registered a deficit of 50 % in recent years. In this case, there isn’t much that Transnistria can do," Nikolai Kuzmin told Veridica.
Economic experts in Chisinau say that the new Customs Code will indeed generate economic problems for the Tiraspol regime.
"At the customs of the Republic of Moldova, when goods are imported, three taxes are paid. The first is VAT, which is 70% of all customs revenues, then excise duty, which is 25% of all collections and then customs duties, which is our topic of discussion related to Transnistria, which is only 5% of the total. What does this mean? Now, if a company from the right side of the Dniester imports a certain commodity and pays 100 dollars, one from the left of the Dniester that imports the same commodity will pay a maximum of 5 dollars. So, 20 times less", says the IDIS Viitorul economic expert Veaceslav Ioniță.
The expert also says that in 2024, the Republic of Moldova anticipates a revenue of 38.5 billion lei (about two billion euros) from the customs of the Republic of Moldova from import-export taxes.
"I think it will be more, but this is the minimum amount that the Government is counting on. The Transnistrian part of taxes of this kind will be a maximum of 300 million lei [approximately 15 million euros]. This means that Transnistrians will pay about 0.7% of the tax. So, 99% of the tax, of all customs payments, is from the right bank. But what does this mean for the budget? This is where things get nuanced. To Chisinau this means nothing, but it means something to Transnistria. For us, it’s about 0.3% of the national public budget. We don't feel this money, because it is not even visible in the budget, where it is rather under an "invisible chapter", says Veacelav Ioniță.
He also states that if we look at things from the perspective of those on the left bank of the Dniester, these taxes account for approximately 10% of the revenues to the budget of Transnistria. "Therefore, these new taxes are not a topic of discussion for Chisinau, but for those on the left bank of the Dniester it is an important topic", the expert concluded.
Tiraspol feels victimized and asks for Russia's help
Against this background, on February 28, at the Congress of Deputies of all levels of Transnistria, held on February 28 in Tiraspol, the Transnistrian regime requested the intervention of Russia.
The Transnistrian MPs passed a resolution calling on Russia's Federation Council and State Duma to take "diplomatic measures to protect [Transnistria] in the face of increasing pressure from Moldova".
Russia reacted after the "request for help" from Tiraspol, announcing that protecting the interests of the population of the separatist regions was "a priority".
Also, during a meeting with the Russian ambassador to Tiraspol Oleg Vasnetsov, the secessionist leader Vadim Krasnoselsky requested, on March 6, Russia's intervention in the Transnistria conflict settlement negotiations in the 5+2 format. This format has been defunct since 2019, and Ukraine refused to be part of it after Russia invaded the country in February 2022.
The Deputy Prime Minister for Reintegration of the Republic of Moldova, Oleg Serebrian, told Veridica that Tiraspol had been complaining for two years that Transnistria would be subject to a blockade, an accusation which, however, is unfounded.
"We are trying to convince everyone, to demonstrate with numbers, not just words, that things are not that dramatic, and we stress the fact that our interest is that there is no social and economic crisis in the region."
Oleg Serebrian also said that it is in Chisinau's interest that its citizens from Transnistria do not face greater social or economic problems than those on the right side of the Dniester.
"Everyone has problems these days and these problems are generated – and I say this also to the dialogue partners in Tiraspol - by the Russian Federation, by the Russian aggression against Ukraine, which has disrupted economic life everywhere in Europe. Germany is faced with big economic issues and other Western European countries as well. But the cause, the root of these problems, is not in Chisinau, neither in Kyiv, nor in Washington, but in Moscow", explained Serebrian.
The official also added that Tiraspol understands very well that it can no longer count on Moscow under the current circumstances, that the European Union or the United States or Ukraine have a say, including in the Transnistrian settlement process.
Transnistria’s holey 2024 budget
Tiraspol’s secessionist administration stated in December 2023 that it had adopted a budget for 2024 with a record deficit, explained by the massive decrease in revenues. Thus, 50% of expenses are not covered. For the first time in recent years, there’s been no increases in pensions or salaries, or at least their indexation with the inflation rate.
One third of the expenses planned by the Transnistrian administration in 2024 are for the salaries of state employees. They are mostly employees of the administrative apparatus of the secessionist region. The next largest expenditure chapter is that for the armed forces and law enforcement.
Bottom of the list are agriculture, science development and environmental protection. Half of the planned spending for 2024 is "uncovered". Sources to cover a small portion of the deficit are named “loans”, but the article describing the loans that Tiraspol intends to get is classified.
Under these circumstances, the Tiraspol political expert Nikolai Kuzmin says that the leverage of the regime in Transnistria is smaller compared to the period before the war.
"In brief, I would say that Chisinau sees the situation as a chance to resolve the conflict by gradually including Transnistria within the jurisdiction of the Moldovan authorities. Tiraspol resists, realizing the weakness of its position and its consequences, as I see it. The only significant leverage of the Transnistrian authorities remains cheap electricity. It is produced with the help of Russian gas, for which Transnistria does not pay. But at the end of 2024 the transit contract between Russia and Ukraine will expire."
The political expert from Tiraspol cannot give a prognosis about how this tense episode will turn out, but certainly the expiration of the contract on the transit of Russian gas through Ukraine at the end of 2024 will create big problems for the Transnistrian region.
"But this is certainly a challenge for both Tiraspol and Chisinau, as the increase in gas prices can lead to an increase in electricity prices for the right bank of Moldova and to humanitarian issues in Transnistria, whose citizens are unable to pay, at least, for their own electricity. I think that in the event of a negative development of the situation, the parties will have to solve the general issues arising. Fortunately, 2020 showed that this is possible," Kuzmin concluded.
An increasingly authoritarian regime in Tiraspol: political repression and human rights violations
Politically, things have gotten worse in Transnistria. Opponents of the pro-Russian regime in Tiraspol die under suspicious conditions or are imprisoned, and those who oppose the war started and waged by the Russian Federation in Ukraine also get behind bars.
In July 2023, the leader of the opposition Communist Party of Transnistria, Oleg Horjan, was killed in his own home near Tiraspol. The EU and the US have asked the regime in Tiraspol to carefully investigate this case, which has not been solved to this day.
Stepan Popovsky, an NGO "Apriori" activist and human rights lawyer from Tiraspol, told Veridica that the pro-Russian regime in Tiraspol has become increasingly violently restrictive with political opponents, and the situation in the region has deteriorated from a political, economic and social point of view.
"This situation was helped by the pandemic too. Everything was banned under the threat of the pandemic. Any kind of speech on the Internet that is not consistent with the regime, for one reason or another, has been persecuted. Since the beginning of the war [in Ukraine], Russia has also had some frustrations, but, let's say, relating to other issues. The problems caused by the war are felt not only in Russia, but also in other countries," said Popovsky.
The regime in Tiraspol is putting increasing pressure on anyone who rebels against Russia's military intervention in Ukraine. There is no possibility for anyone to protest the war or take to the streets to show support for Ukraine.
Popovsky cited the example of activist Victor Pleshkanov, who was imprisoned in July 2022 by the Transnistrian secret services – MGB – on charges of inciting extremism after he waved the Ukrainian flag on the balcony of his apartment in Tiraspol.
His case is not a singular one. In November 2023, Mihail Ermurachi, a 73-year-old civic activist from Tiraspol, was illegally convicted and imprisoned in the Transnistrian penitentiary for allegedly calling separatist leader Vadim Krasnoselsky a "mercenary". Ermurachi was initially fined around 500 euros, but because he could not pay, he was sent to prison.
As a lawyer, Stepan Popovsky took both cases to the European Court of Human Rights. For several years, the ECHR has been condemning Russia for all human rights violations, as it considers the regime in Tiraspol to be in the hands of Moscow and acting at the behest of the Russian Federation.
For such human rights issues, Moldova has few levers of action in the territory on the left bank of the Dniester River which it does not control. However, Popovsky believes that the Chisinau authorities are doing too little.
"The tragedy is that sovereign Moldova does not offer us any means of protection. We need means of protection, means of legal protection. Providing the means of legal protection is the duty of the state according to article 13 of the European Convention of the Council of Europe. The state ignores it, completely ignores it. It pretends that this regime is not its concern", concluded the lawyer who defends human rights in Tiraspol.
Moldova became a member of the Council of Europe on July 13, 1995.
The fact that the situation has deteriorated with regard to the protection of human rights in Transnistria has also been also confirmed by Ion Mandole, the director of Promo-LEX, the most vocal NGO in the Republic of Moldova in the field of human rights protection.
"After the full-scale war started by Russia against Ukraine in 2022, Tiraspol has tightened even more the control over the freedoms that the inhabitants of this territory had or should have," Manole told Veridica.
Currently, the regime in Tiraspol refuses face-to-face meetings with Chisinau under the pretext that representatives of Transnistria could be arrested if they come to the right bank, as a result of the amendment of the Criminal Code and the tightening of penalties for separatists. However, this does not prevent the leaders of the Tiraspol regime from traveling through the Chisinau International Airport.
Under these circumstances, tensions between Chisinau and Tiraspol will intensify, and the war in Ukraine will lead to an even greater pauperization of the region. Moldova has not publicly presented any contingency plan on how exactly it could reintegrate the Transnistrian region, especially from a social and economic point of view. Without massive help from Western partners, it is hard to believe that the Republic of Moldova will be able to reintegrate the two shores with its own limited resources, even under favorable political circumstances. All this time, Transnistria will continue to be one of the platforms from which Russia will try to destabilize the Republic of Moldova and sabotage its European course.
