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EU must tackle Moldova’s frozen war
EU must tackle Moldova’s frozen war
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

EU must tackle Moldova’s frozen war

Originally published in Politico

MOLDOVA is soon to become one of the EU’s newest neighbours, so anything Brussels can do now to help advance peace in Moldova’s tense ‘frozen war’ and diminish its role as a major centre for organized crime will bring long-term benefits to Europe.

With the expected entry of Romania into the Union in 2007, the EU will share a long frontier with Moldova and will thus come to share many of that troubled country’s problems.

Moldova is the poorest country in Europe and it suffers from an uneasy sense of identity and uncertain borders. A civil war in the early 1990s left the post-Soviet state divided in two, with only the government in Chisinau recognized internationally. The unrecognized separatist region of Transdniestria has essentially been a mafia-run fiefdom able to survive thanks only to criminal profits and support from certain circles in Russia and Ukraine.

The frozen conflict has allowed Transdniestria to thrive as a safe haven for criminals and an entrepôt for trafficking of all kinds. Transdniestrian authorities not only profit from trade in standard goods such as fuel, cigarettes and liquor, but also from trafficking in arms, drugs and human beings. One of the major routes for trafficking in human beings to Russia and Arab countries goes via the Transdniestrian “capital”, Tiraspol, and the Ukrainian port of Odessa. In addition, the region is a prime location for money laundering and arms production, notably small arms and grenade launchers, for illegal export. Firearms produced in and trafficked from Transdniestria are said to lack serial numbers, making them ideal for organized crime.

In the current situation, such activities can be conducted in and from Transdniestria very easily and with impunity. International law enforcement bodies are not allowed there and international governmental and non-governmental organizations are unable to operate normally. It is difficult to provide training for officials or expertise on legislation, awareness-raising campaigns and witness protection programmes related to trafficking issues when the authorities are not recognized internationally and are resistant to international pressure and intervention.

In short, Transdniestria is a one-stop shop for criminal goods and services of every possible description. Not exactly the ideal new neighbour.

Indeed, it is precisely this criminal side that is most worrying for Europe; it is certainly more worrying than the threat of the frozen conflict hotting up again. But, of course, it is exactly the frozen nature of this conflict that allows the criminal status quo to continue, so tackling the criminal threat posed by the EU’s soon-to-be new neighbour means finding a permanent resolution.

The civil war in Moldova was relatively mild by post-Soviet standards when you consider the Georgian civil war, the Armenian/Azeri war over Nagorno-Karabakh, or the decade of implosion in Chechnya. But this does not make a long-term solution any easier to find. Despite its impending move into the neighbourhood, the EU has not done all it can.

To be fair to Brussels, the EU has not even been included when it logically ought to have been. The Union is formally absent from the peace process, where the mediators are the Organization for Security and Cooperation in Europe (OSCE), Ukraine and Russia. Moldovan authorities also recently ignored Brussels in the preparation of a new peace plan, for which they consulted widely in Washington and Moscow. Chisinau’s expressed wish “to draw the EU closer to the resolution of the Transdniestrian conflict” seems hollow to those in Brussels who are clearly annoyed at being overlooked.

Rather than simply complain about being left out, however, the EU needs to make a concerted push to demonstrate its strong desire to see this problem resolved and its ambition to get involved actively. The first step would be to open a full European Commission delegation office in Moldova. And within the new European Neighbourhood Policy, which has raised expectations in Moldova, the EU also needs to set out clear benchmarks for the country – worked out in close cooperation with the OSCE and the Council of Europe – for development of democracy, rule of law and human rights, including specific benchmarks to be met in Transdniestria.

Brussels and the member states must be prepared to target the Transdniestrian leadership with further sanctions if the negotiation process remains blocked, or Transdniestria fails to meet the benchmarks in the Action Plan, and urge Russia to join such measures and refrain from helping the Transdniestrian regime consolidate its power.

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 when the Union shares a long border with the country in perhaps less than three-years’ time. The EU also has something to offer: the unfortunate irony of this whole situation is that the technical points currently disputed in the Moldovan peace talks are issues such as control of customs and trade arrangements – the very subjects at the core of the EU and issues Brussels could apply vast experience to.