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In Search Of A Solution
In Search Of A Solution
Report 175 / Europe & Central Asia

Moldova's Uncertain Future

With Romania’s expected entry into the European Union in 2007, the EU will share a border with Moldova, a weak state divided by conflict and plagued by corruption and organised crime. Moldova’s leadership has declared its desire to join the EU, but its commitment to European values is suspect, and efforts to resolve its dispute with the breakaway region of Transdniestria have failed to end a damaging stalemate that has persisted for fifteen years.

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Executive Summary

With Romania’s expected entry into the European Union in 2007, the EU will share a border with Moldova, a weak state divided by conflict and plagued by corruption and organised crime. Moldova’s leadership has declared its desire to join the EU, but its commitment to European values is suspect, and efforts to resolve its dispute with the breakaway region of Transdniestria have failed to end a damaging stalemate that has persisted for fifteen years. Young people have little confidence in the country’s future and are leaving at an alarming rate. If Moldova is to become a stable part of the EU’s neighbourhood, there will need to be much greater international engagement, not only in conflict resolution but in spurring domestic reforms to help make the country more attractive to its citizens.

Two recent initiatives by the EU and Ukraine gave rise to hopes that the balance of forces in the separatist dispute had changed significantly. An EU Border Assistance Mission (EUBAM) launched in late 2005 has helped curb smuggling along the Transdniestrian segment of the Moldova-Ukraine frontier, a key source of revenue for the authorities in Tiraspol, the Transdniestrian capital. At the same time, Kiev’s implementation of a landmark customs regime to assist Moldova in regulating Transdniestrian exports has reduced the ability of businesses in the breakaway region to operate without Moldovan oversight, striking a major psychological blow.

But optimism that these measures would ultimately force Transdniestria to make diplomatic concessions appears to have been false. Although EUBAM has had significant success, particularly given its small size and budget, widespread smuggling continues. Nor has the Ukrainian customs regime had a decisive effect on Transdniestrian businesses, which remain capable of profitable legal trade as they were in the past. Moreover, domestic political uncertainty has raised questions about whether Kiev will continue to enforce the new regulations. 

Russia has increased its support for Transdniestria, sending economic aid and taking punitive measures against Moldova, including a crippling ban on wine exports, one of its main revenue sources. Moscow refuses to withdraw troops based in Transdniestria since Soviet times whose presence serves to preserve the status quo. With Russian support, the Transdniestrian leader, Igor Smirnov, has little incentive to compromise in his drive toward independence. The internationally-mediated negotiations between the two parties are going nowhere, despite the presence since 2005 of the EU and U.S. as observers. Although some understanding had been reached about the level of autonomy in a settlement, Moldova has hardened its position to match Transdniestria’s intransigence.

Barring a softening of Russia’s stance, the best chance for moving toward a sustainable settlement is to convince the Transdniestrian business community that cooperating with Moldova is in its own interests. There is evidence that some business leaders are growing frustrated with Smirnov and may be willing to work with Chisinau. 

For this to happen, however, both Transdniestrians and Moldovans will have to believe in the country’s economic future. Its business environment is poor, foreign investment is low, and GDP per capita is on a par with Sudan’s. The Communist Party government, headed by Vladimir Voronin, has shown little will to root out corruption and improve the business climate, and its Transdniestria policy seems based more on easy rhetoric than engagement. Moldova’s relatively new commitment to a Western-oriented policy is opportunistic rather than deep-rooted.

The EU has the leverage to play a greater role in pressuring Moldova to carry out reforms; it can also help by lifting tariffs on agricultural products, including wine, that Moldova could potentially sell in its market, as well as on products from Transdniestrian factories such as steel and textiles. Transdniestria’s smuggling revenue must be further restricted, through long-term assistance to the Ukrainian and Moldovan border and customs services and a multi-year extension of EUBAM’s mandate. The Transdniestrian business community needs confidence it can make money in a united Moldova but it is equally important to limit the economic benefits of the status quo.

Even if efforts to alter the economic calculus are successful, however, the absence of mutual trust will remain debilitating. Addressing this will likely require years of confidence-building, through political dialogue, transparent customs rules and trade relations, and measures to increase democratisation and freedom of the media on both sides. It may also require international guarantees to convince Transdniestrian businesses that they will not be stripped of their assets by the Moldovan government following a settlement.

Moldova is increasingly reliant on the EU and so is vulnerable to pressure from Brussels for reforms that would increase its economic and political attractiveness to its own citizens, including Transdniestrians. These reforms will have to have a central place if the groundwork for a settlement is to be prepared. The U.S. has been content to let the EU lead on Moldova, and the EU has done so – to a degree. But it must do far more with both incentives and pressures if it is to secure peace and prosperity in its neighbourhood and strengthen the weak roots of Moldova’s European policy.

Chisinau/Brussels, 17 August 2006

Op-Ed / Europe & Central Asia

In Search Of A Solution

Originally published in IWPR

Moldova is soon to become one of the European Union's newest neighbours. With the expected entry of Romania in 2007, the EU will share a long frontier with the poorest country in Europe, which suffers from an uneasy sense of identity and uncertain borders.

The unrecognised separatist region of Transdniester has been out of the control of Moldova's capital, Chisinau, since 1992 and is essentially a mafia-run fiefdom which survives thanks only to criminal profits and support from certain circles in Russia and Ukraine - and the security presence of the 14th Russian Army.

The region is a prime location for money laundering and the production and illegal export of weapons. Firearms produced in and trafficked from Transdniester are said to lack serial numbers, making them untraceable and therefore ideal for organised crime.

In the current situation, such activities can be conducted in and from Transdniester very easily and with impunity, as international law enforcement bodies are not allowed there, and international governmental and non-governmental organisations are unable to operate normally within its borders.

As a result, it is difficult to provide training for officials or provide expertise on legislation, awareness-raising campaigns and witness protection programmes relating to trafficking issues when the authorities are not recognised internationally and are resistant to international pressure and intervention.

The civil war in Moldova was relatively mild by post-Soviet standards when you consider the Georgian civil war, the Armenian-Azerbaijani war over Nagorny Karabakh, or the decade of implosion in Chechnya. But this does not make a long-term solution any easier to find.

A Russian attempt to break the deadlock, the so-called Kozak Memorandum of November 2003, foundered on two issues: the constitutional set-up of a reunited Moldovan state, and Russia's continued military presence in Transdniester.

Russian officials admitted afterwards that their negotiator Dmitry Kozak - an adviser to President Vladimir Putin - failed to get the necessary buy-in to the plan from Washington and the EU via the existing OSCE negotiating mechanism.

However, the EU's new European Neighbourhood Policy - which is designed to improve stability and security in areas soon to border on the EU following its expansion - has raised expectations in Moldova.

The European Commission will shortly be publishing an Action Plan for the country, which should contain clear benchmarks for the country for development of democracy, rule of law and human rights. After an initial period when Chisinau got a relatively good bill of health on this score, the 2003 local elections and continuing state harassment of journalists and media indicate a worrying trend.

A regime of visa sanctions against the Transdniestrian leadership, imposed in early 2003 in frustration with their failure to move the peace process forward, was intensified in July 2004 in reaction to Tiraspol's harassment of Moldovan-language schools.

Tensions also rose in the divided town of Tighina/Bendery in autumn 2004, when Transdniestrian militia seized control of a vital railway station.

The EU has a clear interest in helping to clean up the serious problems caused by poverty and endemic crime in Moldova, as both threaten to bring even greater problems with Romania's succession in perhaps fewer than three years' time.

And whether or not one believes Chisinau's claims that Transdniestrian arms are flowing to Caucasian rebels, it surely cannot be in Russia's long-term interests to allow the dispute to continue to fester.

At present, international actors are unwilling to invest resources in Moldova; the painful memory of last year's botched Kozak plan lingers.

What is needed is a joint EU-Russia effort to find a solution, in the context of the European Neighbourhood Policy and also of Russian's 1999 commitment to withdraw its troops and equipment from Moldova, and specifically from Transdniestria.

The EU's designated new external relations commissioner, Benita Ferrero-Waldner, has had some experience of the issue from her time as Chair-in-office of the OSCE in 2000.

Perhaps Brussels and Moscow will find the necessary time and energy to resolve this comparatively minor problem soon.