Transnistria is in a Pickle

Explainer September 10, 2023

In this article we’re returning to our “Explainers” format to take a hard look at what the future may hold for Transnistria and for the breakaway region’s relations with Moldova. This article follows one of our most read articles ever “Moldova is in a Pickle” which sought to outline to opportunities and constraints Moldova faced back in April 2022. Recently there have been a spate of articles written in both the local press and English language outlets addressing this very issue. I would particularly highlight Newsmaker journalist Evghenii Ceban’s “Time is running out to solve Moldova’s Transnistria question,” written for Open Democracy Russia, and “Three scenarios for the Transnistrian conflict settlement” written by Moldovan political risk analyst Denis Cenusa for bne IntelliNews. These articles have different focuses and conclusions but are both extremely well reasoned. This article adds my perspective and analysis to what is almost certain to be a topic of growing interest and concern.

Note: For those unfamiliar, to be “in a pickle” is an English language idiom equivalent to “between a rock and a hard place” or, simply put, in a difficult situation.

Transnistria is in a Pickle

At the outbreak of full scale war in February 2022 the future of Moldova and the breakaway Transnistrian region took a dramatic and unexpected turn. Moldovan leaders, Transnistrian leaders and the Ukrainian government were all caught off guard to one extent or another as Russia began a full scale invasion that shocked the world both for its boldness and its ill conception. In Moldova the acute emergency was multi-faceted. Firstly, there was a humanitarian crisis as over 10,000 Ukrainian refugees spilled across the border every 8 hours. Secondly, there was the very real threat of direct military aggression as Russia had clearly signaled (and continues to signal) that the Kremlin’s ultimate war aim’s include Moldova. Finally, there was the threat of a multi-faceted energy and economic crisis.

While the war is still raging it is now possible to take a step back and start looking at what this pivot point in history means for Moldova and the breakaway Transnistria region. As we will see, the beginning of the war destroyed the status quo and there is almost no path that returns the country to where it was pre-2022. To explore this issue we are going to start with a baseline assumption: Ukraine will win this war. We have no idea what victory will look like or what form it will take, such speculation is beyond this article. But we need to start with this assumption for 2 reasons. Firstly, it is my belief that this is the most likely outcome of this conflict. Secondly, without assuming some hypothesis as to the outcome of the war this article will become mired in questions of battlefield positioning and potential end games. So for simplicity, we will assume that Ukraine will win this war in such a way that assures security and control of all, or the vast majority of the country, especially all regions bordering Moldova.

With that assumption, let’s look at the big picture factors that are driving the status quo and will shape the future of Moldova and the frozen conflict on the Nistru.

Critical Factors in the Moldova-Transnistria “Relationship”

The following are the most important realities, both political and geopolitical, that shape the current relationship between Moldova, Transnistria, Ukraine and Russia.

Transnistria:

• Dependence on Russian Gas: Transnistria is fully dependent on Russia gas. For most of Moldova’s history Russia has provided free gas to the Transnistrian region while simultaneously “charging” Moldova for this gas. Russia does not recognize Transnistria’s independence officially, and so it claims that the free gas it provides (of its own accord) is Moldova’s responsibility to pay (debt of around $10 billion dollars). Transnistrian “leaders” take this gas and do 2 things with it. Firstly, they sell it to their population at a subsidized rate. This allows them to pocket the arbitrage of selling free goods as critical budget revenues. It also provides Transnistrian residents with far cheaper energy than the rest of Moldova’s citizens. Secondly, this free gas powers Transnistria’s heavy industry, primarily metal smelting and electricity production (MGres power station). These industries are Soviet-legacy factories and power stations. Brick production in Transnistria is around 4x cheaper than in Moldova. At a market gas price these Soviet industries are not uncompetitive, they are non-existent.

• Reliance on Moldovan Business Structures: Transnistria exports around 75% of its goods to the European Union. The EU does not recognize Transnistria or its companies so this is only possible via a workaround. Transnistrian companies register Moldovan companies which manage their export business and pay taxes to the Chisinau government. Without these business licenses Transnistria has no viable export economy.

• Fear of the Kremlin: Transnistrian elites are dependent on Russia for gas and are “hosts” of the Russian army in the form of “peacekeepers” and regular army units. In his article listed above Denis Cenusa argues further that the “execution” (alleged) of Prigozhin as well as other Kremlin assassination campaigns around the world provide a further concern for Transnistria’s elite who know of the Kremlin’s arm is long and that it treats traitors without mercy.

• Fear of Russian Victory: While we aren’t considering a scenario where Russia wins the war, conquers Ukraine and takes part of all of Moldova (starting with Transnistria), it is worth noting this point. The perks of free gas are provided as a thorn in the side of the Chisinau government. If Transnistria became part of Russia it would lose the gas, lose the EU export relationship and the elite themselves would no longer be useful in the way they are now. A Russian victory would destroy Transnistria as it exists today.

Moldova (Chisinau controlled):

• Energy Interdependence: Moldova has largely broken free of Russian natural gas. The country has a pipeline to Romania and can buy gas on the open market that transits this pipeline and through Ukrainian infrastructure. At the same time, Moldova is *heavily* reliant on electricity produced at MGres both for cost and because of infrastructure connections. Moldova is building new high-voltage power lines to Romania but they will not be done until 2025. Until then Moldova is entangled with Transnistrian energy.

• Cobasna Ammunition Depot: The village of Cobasna in north-east Transnistria contains one of the largest ammunition depots in Europe. It stores Soviet era arms and ammunition - something that Ukraine badly wants. Moldova has been adept at using this as a bargaining chip with Russia in the past year as Ukraine wants to move in and take the arms but will not do so without Chisinau’s permission. At the same time, the Moldovan government’s main goal is to get rid of this dangerous stockpile. Analysis we spoke with have said that if it were to explode windows would break in Chisinau 90 km away.

• Humanitarian Concerns: Moldova considers Transnistrians as Moldovan citizens. Importantly, most of them hold Moldovan passports in addition to their “Transnistrian” ones. Should catastrophe befall the region (war, energy crisis, etc) the Moldovan government would be forced to react to the suffering of its citizens.

Ukraine:

• Security Concerns: Until 2015 Ukraine allowed Russian troops to transit the country in order to rotate and supply their garrisons in Transnistria. Moldovans are quick to point out that without Ukraine’s tacit support for Transnistria in the 1992 war the region would not have been able to break away at all. Now Ukraine’s security position recognizes the danger of this knife positioned at their back. In the short term, Ukraine would like to reposition troops defending the Transnistrian border to more critical fronts. In the long term, Ukraine has signaled that it is not willing to condone the continued presence of Russian troops in the region.

Russia:

• Frozen Conflict as Control Mechanism: Russia utilizes the frozen conflict on the Nistru, as well as energy, as a way of controlling and coercing Moldova. Now that the EU has stated that resolution of the Transnistrian conflict is no longer a pre-requisite to Membership, Chisinau has a freer hand to manage the region and Russia’s influence is diminished… but still strong as a destabilizing factor.

• Overall War Aims: Russia has clearly indicated parts of Moldova as in their overall war aims. The goal of “gathering the Russian speakers” to Moscow is clearly a driving factor for Putin. The competing interest of Transnistria as a “tool” to coerce Chisinau and an “end” in itself make the Kremlin unpredictable in the medium and long term.

The Ticking Clock…

Over the past few months it has become clear to all parties that the “Transnistria question” is one that is coming to a head. Interpretations vary but 3 factors have come together to underline the untenability of the status quo.

1. War and Geopolitical Shifts: As mentioned above, the war totally changed Ukraine’s calculus regarding Transnistria. Furthermore, it has shaken Moldova out of a long sleep and caused the country to begin modernizing and expanding its military. Pre-war, the balance of military power was somewhat to Transnistria’s advantage vis-à-vis a conflict with Moldova. This is shifting. The balance of Military power between Transnistria and Ukraine is that of a gnat and a giant. More importantly, as an actual conflict is highly unlikely, Moldova’s EU-Candidacy, and the recognition by the EU that the resolving the Transnistria conflict is not a pre-requisite for membership, provides a clear economic and security future for Moldova - and none for Transnistria.

2. Natural Gas from Russia: Ukraine has a contract with GazProm for the transit of Russian gas through the nation that will expire in December 2024. The Ukrainian authorities have said that they have no intention of renewing this contract. A recent study by Columbia University came to the conclusion that Russian gas transit through Ukraine after December 2024 is highly unlikely. This is a ticking clock on the free gas that is the lifeblood of the region’s economy and budget.

3. The Failure of the 5+2 Format: The outbreak of the war finally broke the internationally recognized 5+2 negotiating format that sought a peaceful resolution to the frozen conflict. Under this format there were 5 parties to negotiations: Moldova, Transnistria, Ukraine, Russia and the OSCE, and 2 observers, the United States and the EU. There is no prospect of reviving this format and seeing Russia and Ukraine at the same table (or almost anyone else with Russia for that matter). Without a format for negotiations there is no internationally recognized mechanism for resolving the frozen conflict currently.

Recognizing that these factors are coming to a head, we’ve seen some recent statements from various stakeholders in this conflict laying out their positions and future outlooks. “Head” of the Transnistrian “Foreign Ministry” Vitaly Ignatiev recently spoke of how a "moment of truth for Transnistria is coming." He talked about how there were “irreconcilable differences” between Transnistria and the rest of Moldova in law, economics, politics, geopolitics and more. His statements essentially implied that the time for the region’s full independence was approaching.

The Moldovan Ministry for Reintegration responded firmly not only with the country’s position but highlighting why independence is not even a practical reality:

“The State of Moldova (RM) and its borders, which include the Transnistrian region of the country, are recognized by the international community, 95% of the inhabitants of the eastern regions have the citizenship of the Republic of Moldova, 100% of economic agents from the region carry out external commercial activities on the basis of permits issued by the competent national authorities. It is well known that the main goal of the negotiation process on the Transnistrian settlement is the full reintegration of the Transnistrian region into the common space of Moldova. This approach was supported by external partners and internationally recognized states, and all the efforts of the constitutional authorities are focused on this direction,”

This trade of statements highlights the most important factor in this entire discussion. Simply put, there is one acceptable outcome for the Transnistrian “state” and elite - the status quo ante. In order for the region to enjoy the independence and relative (elite) prosperity it is necessary to wind back the clock. Lacking that, they don’t have real options. Moldova could recognize their independence… their economy would collapse due to lack of exports and the stop of Russian gas. Achieving what they have said they wanted over the past decades would destroy them.

Now, nothing is set in stone and there are powerful outside forces at work here too. Ukraine continues to state that a Ukrainian victory will result in a re-united Moldova. Importantly, some EU countries have already begun threatening consequences if Ukraine stops the transit of Russian gas at the end of the contract. Hungary’s Victor Orban, in an interview with Tucker Carlson, said that interfering with the transit of gas would be a “casus belli” for Hungary. It does not seem likely that Hungary will go to war with Ukraine on this issue, but the hyperbole masks others that would like to see a resumption of “business as usual” with Russia after the war - most critically in Germany. Meanwhile the Transnistrian “leader” Vadim Krasnoselsky has recently stated that the region has the ability to bring Russian gas in without Ukrainian infrastructure and that it has already tested this path. Energy experts largely responded by saying “look at a map,” highlighting the total detachment from reality of these statements. But the fact that Krasnoselsky felt the need to try and assure his “citizens” of this speaks volumes. He knows the clock is ticking.

Considerations for Re-integration

So if the clock is ticking, what happens next? Firstly, about timeframe. Nothing major is likely to occur until either the war ends or the gas contract expires. That is not to say nothing *could* change, just that the major forcing factors we are aware of are still in the future… but not the distant future at all.

With these forcing factors coming though, it makes sense for all parties to start considering what re-integration would look like, and what are the alternatives. We’ll look at some potential scenarios below, but first here are some key considerations that will drive any diplomatic, political or crisis scenario:

1. Oligarchs: The Transnistrian “government” and economy are fully controlled and driven by a small set of elites with oligarchic backing. The Sheriff Company in particular controls almost everything in the region from gas stations to manufacturing, from supermarkets to FC Sheriff Tiraspol their unexpectedly good football (soccer) team. These oligarchs are unlikely to integrate themselves into Moldova’s economy and (aspiring) rule of law system easily. They may fight reintegration, they may flee, or they may try and extend their corrupt influence to Chisinau. Politically they are a critical challenge.

2. Laws and Institutions: Transnistria is captured by the interests of corrupt oligarchs and the Russian security services. At the same time, nominally there are laws, regulations and institutions that support these power structures that are totally different from the rest of Moldova. Rationalizing these competing structures would be a major challenge even if the power behind them evaporates.

3. The Russian Army: The Russian army remains in the region and must chose, or be forced, or depart before a re-integration process can take place.

4. Energy and Economics: We’ve clearly discussed the challenges of a cutoff of free Russian gas already. But we haven’t asked what happens to the residents of Transnistria if this occurs? Will they freeze? There is a potential humanitarian crisis that comes with any cessation of Russia’s free energy supply. Recently Time Magazine published an opinion piece titled “How Europe’s Poorest Country Could Win the Green Energy Race.” In it, author Suriya Jayanti noted that Moldova is currently the most energy insecure country in Europe. She argues that starting from zero might afford Moldova the opportunity to jump ahead in the green energy race if they government moves quickly. Her argument is based on the fact that the country is small, has extremely modest energy consumption per-capita compared to other countries in Europe, and frankly, has almost no other choice. She also correctly notes that the PAS government has historically had an aversion to dealing with the kinds of big international investors that would be necessary to move quickly in developing alternate energy sources. The article highlights Moldova’s dual energy problems - firstly, to assure affordable supplies for Moldova’s citizens. Secondly, to have infrastructure that could pick up the slack and prevent a humanitarian crisis in Transnistria. In this case, the clock is ticking very quickly as new energy investments can take years to come online.

5. An Influx of new Voters(?): Many articles have focused on the fact that in the event of re-integration Moldova would be absorbing around 250,000 “new” voters with a largely pro-Russian worldview. Given how tight Moldova’s elections can be, and the fact that these “new” voters will be leaving a reality of artificially low energy prices and other Soviet style subsidies, there is a worry about how they will shape the electorate. In part, this analysis is flawed as 95% of Transnistrians already have Moldovan citizenship and can and do vote in elections. At the same time, in part, the analysis is correct to worry as this citizenship would suddenly go from a theoretical exercise to a very real one in an environment of massive economic change and turmoil for the region.

Evghenii Ceban’s piece linked above calls for Moldova to quickly begin building a plan for re-integration. He notes how planning in the Moldovan government has largely been theoretical and has assumed a long timeline. In part, the factors above incentivize Moldova to seek a longer timeline with a gradual re-integration process. The question is, can Chisinau control this timeline? Or are events outside of Moldova running down the clock faster than the government is developing plans?

Scenarios for Reintegration (or not)

The sudden appearance of multiple articles and interviews discussing that may happen to Transnistria provide a number of different takes on how the future may play out. Denis Cenusa’s article for bne IntelliNews roughly outlines 3 scenarios: gradual reintegration / status quo, rapid forced re-integration by Ukraine and Russian escalation. Evghenii Ceban’s article for Open Democracy Russia focuses on whether or not Chisinau has a plan for a rapidly evolving scenario and what it might look like. Meanwhile, Brian Whitmore’s Power Vertical Podcast recently discussed the various possibilities within a larger geo-political context (and with a number of factual mistakes on the history that brought us here).

All of these articles and interviews add great insights and important opinions and analysis to what is an overwhelmingly complicated situation. At the same time they highlight 2 critical realities. Firstly, the outside world is not very well informed about what the history of Transnistria is and how things stand. We see this in the Power Vertical Podcast’s misunderstanding of the fall of Plahotniuc and the timeline of Moldova’s 2021 constitutional crisis. We also see it in a map in Open Democracy Russia’s article which does not correctly show Moldova’s border with Transnistria by omitting to include the enclaves that each side has on the other’s side of the river (we discuss this a lot in the Moldova is in a Pickle article). This is not meant as criticism, it is meant to highlight the fact that so little study has been made of this conflict outside of Moldova that in the event of rapidly accelerating events there is likely to be lots of misunderstanding in the international community. Critically, more Moldovan voices like Evghenii Ceban and Denis Cenusa are necessary to start educating the English speaking western public on how this might play out. Or, as Evghenii Ceban notes, more public communications and clearly articulated planning from the Moldovan government itself is necessary before there is a crisis moment.

Moldova’s actual borders with Transnistria - Source Wikipedia

Ok, so will there be a crisis? or what will happen? There are far too many factors in play to make predictions or even educated guesses. But broadly speaking, the following scenarios are the ones worth considering when planning for the future:

1. Gradual (but inevitable) Re-integration: In this scenario, the war ends or evolves in such a way as to make clear that Russia will not triumph. The Moldovan and Transnistrian authorities begin a mutual tightrope walk where both sides seek to hedge their bets without completely disrupting the economic and geopolitical realities in existence. Transnistrian “leadership” begins preparing for a transition away for dependence on Russian gas via various mechanisms of economic and infrastructure integration with Chisinau. The Chisinau government prepares with much more focus for gradual re-integration but does not seek to push the pillars of the Transnistrian regime into a critical place. Compromises may be found on issues such as the Russian army - perhaps Russia backs off of its war aims but still seeks to protect “Russian speakers” by extending gas supplies and acquiescing to a new international peacekeeping mission to replace Russian troops (the idea of a civilian peacekeeping mission is much talked about now, but this could involve UN Blue Helmets in a more extreme variant). In essence, as the world comes to grips with the result of the war in Ukraine, Moldova and Transnistria carefully and quietly lay the groundwork for a future recognizing their geographical inseparability… and critically Russia acquiesces or does not stand in the way.

2. Transnistrian Collapse: A second scenario sees either a military or economic forcing event that suddenly pulls the carpet out from under the Transnistrian “authorities.” Most likely this would be the full cutoff of Russian gas. Alternately, it could be a Ukrainian military ultimatum that calls for the removal of Russian troops. Finally, it could be triggered by a sudden shift in Moldovan policy where Chisinau chooses to recognize Transnistrian independence. That last version may sound crazy and today it is. Moldova will never recognize Transnistrian independence from a position of insecurity as it has the strong possibility to incentivizing Gagauzia to also move for independence. But in a scenario where Ukraine is victorious, Gagauzia has no hope of joining Russia and Transnistria is simply a liability it is not crazy. This version is highly unlikely, but the idea that it might be threatened is not. In any event, a forcing event pushes Transnistria into sudden inviability as a state. In any version other than the extremely unlikely “Moldova walks away” scenario this means an economic, infrastructure, security, law enforcement and humanitarian crisis thrown into the lap of the Chisinau government. The Moldovan government is already stretched extremely thin coping with the war, economic crisis and the needs to rapidly implement reforms to enter the EU. There is no bandwidth for this scenario, especially without a clear plan in advance.

3. Transnistrian Independence: This scenario is extremely unlikely. As mentioned above, Moldova might say “go with god” and try and be done with the troublesome region (highly unlikely). If this did happen, Russia would have to decide what to do - keep providing gas? keep a troop presence? More importantly, Ukraine would have to decide what to do. Recognizing a pro-Russian “country” on their border that can be supplied and reinforced by air via an independent foreign policy? That seems untenable. Meanwhile the Transnistrian economy would collapse just from lack of EU market access alone.

4. Return to the status quo ante: While the above scenario is unlikely, this one is impossible lacking a Russian victory (of some kind) or a freezing and simmering of the conflict in Ukraine. The re-election of Donald Trump might bring about a scenario in Ukraine that would create the conditions for Transnistria to see a few more years of the status quo. But lacking any major external changes to the war or geopolitical situation this can be ruled out in the medium or long term.

So where does this leave us? Certainly no where near being able to make predictions. Too many factors could change unpredictably. One thing I have learned in Moldova is that the political structures here - political parties, bureaucracy and leadership - do not favor bold moves or grand strategies. I often joke that Moldova has one superpower - “muddling through.” The country approached COVID with nearly no strategy, almost no leadership (Socialist Cicu government) and disastrous public communications. At the same time, the worst predictions for economic and health outcomes didn’t come to pass and the country wound up “average” among peers (still bad of course). The Ministry of Reintegration has long been a back-bench post in the government. Moldova has spent just about as much time considering serious re-integration as the South Korean Ministry of Unification has. The problem is that while North Korea seems here to stay, Transnistria is in a Pickle. And their clock is ticking… Will Moldova have a plan for reintegration? Or will it just hope to “muddle through” when a forcing event comes?