Weekly Roundup: Chisinau and Tiraspol Continue to Trade Barbs
January 19, 2023
Chisinau and Tiraspol Spar Over Customs Regulations
As we wrote in last week’s article 2024 - The Year Ahead the relationship between Chisinau and the Transnistrian region is likely to become more contentious as major political and economic challenges loom this year. One of the first examples of this was the decision by the Moldovan government to tax Transnistrian companies registered in Moldova the same as other Moldovan companies for import and export duties.
Transnistrian “leader” Vadim Krasnoselsky has vocally denounced these taxes calling them equivalent to levying “medieval tribute.” Also showing displeasure was a group of several hundred Transnistrian protestors who waved flags and signs on the road between Bender and Varnita opposing the levying of the taxes.
Minister for Reintegration Oleg Serebrian made it clear that actions by Tiraspol would not cause the Moldovan government to change their position. He noted that if the Transnistrian “authorities” levied taxes against farmers in the Dubasari region the central government would help with compensation. The Minister addressed the street protests saying:
“It is important to distinguish between freedom of speech, which in the Transnistrian region is constantly subject to censorship and persecution, and events orchestrated by propagandists who constantly violate the sovereignty and territorial integrity of the country,”
In another statement, Minister Serebrian laid out the purpose of the changes in law saying:
"Our interest is not the asphyxiation of businesses on the left side of the Dniester. We want them to function normally, but to function in accordance with the laws of the Republic of Moldova in the same competitive field"
The Minister also noted that import and export taxes do not apply in cases where Moldova has free trade agreements - which covers many areas of trade with the EU and CIS countries. He estimated that the new tax would bring in around $2.5 to $3 million annually and explained that this is less than Chisinau already spends on services for citizens in the region including scholarships, medical services, pensions, etc. In such a way the Minister said that the taxes flow back to Transnistria in another form.
This week Minister Serebrian met with Transnistrian “head of foreign policy” Vitaly Ignatiev in the first bilateral 1+1 meeting of the year. This is the first 1+1 meeting between the two sides since June 20, 2023. The customs taxes dominated the meeting, but an extra tension was present in the form of Mr. Ignatiev. On January 9th Mr. Ignatiev was summoned to the offices of the Ukrainian Security Services SBU to be informed about a criminal case in which he is a suspect. Ignatiev is a Ukrainian citizen and is suspected of statements that call for “encroachment on the territorial integrity and inviolability” of Ukraine. Ignatiev has not previously condemned the Russian invasion and should the Ukrainian authorities put him on an international wanted list it would create an awkward situation for Moldova as he is Transnistria’s chief negotiator.
So far, Ukraine has not put him on a wanted list and Minister Serebrian said that there has been no official communication from Ukraine and that he heard the news in the press like everyone else.
So the year is starting tensely between the two banks of the Nistru, but the parties have been sitting down to talk.
Other Security News
Here’s a rapid fire roundup of the other top stories involving Transnistria and Moldovan security:
Transnistria alleges border incident with Ukraine. The Transnistrian Ministry for State Security (MGB, formerly the KGB until 2017) alleged that an incident with Ukrainian border guards which it called an “incident involving the use of firearms” occurred on January 7th. They say that the incident resulted in 2 Transnistrian “citizens” being "transferred" to Ukrainian territory. The Ukrainian Border Guards Service denied the statement entirely calling it “provocative.” The Moldovan government also denied the allegations saying that there was no official confirmation of this incident.
The Kremlin summoned the Moldovan Ambassador, banned more Moldovan citizens from entering Russia. Russian authorities protested against "anti-Russian" actions by the Moldovan government including the banning of Russian language TV stations. They also allege violations of Moldovan neutrality citing reports that the Moldovan army is working with NATO to train Ukrainian soldiers on Moldovan territory. The Russian government banned numerous mid-ranking Moldovan officials from entering the country and a number of journalists including the Deputy Editor-in-Chief of NewsMaker Stela Untile. This is particularly ironic as Newsmaker is the most prominent independent Russian language publication in Moldova.
Is Moldova training Ukrainian troops? Not really. The allegation apparently stems from a Ukrainian Army announcement celebrating the coalition of 34 countries supporting the training of the Ukrainian Armed Forces. Moldova is listed in this announcement and the Moldovan Army clarified that they did conduct a joint training between June 6 - 30 of 2023 in de-mining. Moldova has a highly trained contingent of sappers and conducted a training with Ukrainian counterparts.
The State Chancellery has submitted a bill to the government requesting an extension of the time required to evaluate new citizenship applications from 20 days to 6 months. The state agency noted that in the last 2 years 70% of all citizenship applications have come from Russian citizens (20% from Ukrainians) and that after the State of Emergency expired there are too few tools in place to evaluate security risks in time. The government will consider the bill.
Russian “peacekeepers” demonstrate prohibited weapons in the security zone. The “peacekeepers” conducted an exercise this week where they practiced repelling an attack on one of their security points from an armed group in civilian clothing. In the attack Russian troops used RPK machine guns and quadrocopter drones in the simulated defense. These weapons are not officially listed as belonging to the “peacekeepers” under the JCC regulations resulting in diplomatic protests from Chisinau.
Moldova’s Security and Information Service SIS allege that a Russian influence campaign is being prepared to drive a wedge between Moldova and Ukraine. The alleged campaign is said to involve a number of former SIS intelligence operatives who had previously been dismissed either for corruption or for unauthorized interactions with foreign security services. SIS claims that they will publish a document from an unspecified legal case and operate an information campaign which will seek to create rifts between Chisinau and Kyiv. No more details have been provided as of time of writing.
The Global Firepower Index released their military power rankings and placed Moldova at 144 of 145 countries ranked. This is largely a story because it made the news in Moldova and caused some discussion. Moldova undoubtably has a weak army, but the Global Firepower Index is not a very strong source. Military analyst Michael Kofman often says “spreadsheets don’t fight wars” and the Global Firepower Index takes this to a rather extreme place by simply counting capabilities without much analysis - case in point, they rank North Korea as having a more powerful navy than the United States.
Political News
Here is a rapid fire roundup of the main political news of the past weeks:
President Sandu was honored with the newly created “Timisoara Award for European Values.” The award comes with a 30,000 euro cash prize which has caused some controversy as it has become unclear what will happen with the money. MP Olesea Stamate stated that the President can’t really accept this money even if it isn’t a traditional “gift” as understood by the law. In the law on gifts politicians must declare all gifts and may keep ones under a certain value. Over this value they must either turn them over to an agency responsible for collecting the gifts or purchase them back from the government. The Presidential Administration stated that they do not consider this a gift because it is an award in "recognition of the achievements of all citizens of the country and their commitment to democratic values." They have asked the National Anti-Corruption Center to provide guidance on what to do with it.
Former Bashkan Irina Vlah has come out in opposition to the referendum on EU membership. Vlah was formerly a member of the Socialist party but has recently restyled herself as a pro-European politician. She called the referendum a “PR campaign” that would "further alienate Moldova from the EU" and called on the government to organize a referendum on the "permanent neutrality" of Moldova instead. As recently as this week Vlah has not ruled out a run for president saying that she will likely make a decision by May. Her position against the referendum contrasts with that of Mayor Ion Ceban, another prominent former Socialist turned pro-EU convert who has welcomed the referendum and promised to campaign for it.
President Sandu vetoed the proposed changes to the electoral code returning the law to parliament. The President cited problems in the wording that could allow new presidential elections to happen after the current term expires. The ambiguity in the wording of the presidential election timing has caused controversy for months, and with the return of the bill PAS finally clarified the issue and re-voted the law in parliament. Now the election must be held no more than 90 days before the expiration of the president’s term. Alternately, should the office become “vacant” (by resignation, death, etc) the elections must be held within 2 months of the vacancy. Previously there was no distinction between the various ways to “leave office” resulting in a possibility of extending the presidential term by 2 months while elections are organized.
The Constitutional Court CC refused to ratify the parliamentary mandate of Svetlana Popa of the Socialist Party. The court was considering the mandates of 2 new MPs, one from PAS and one from the Socialists, each of whom were slotted to fill seats left open by recent resignations. The court approved the PAS candidate but rejected the Socialist candidate citing that she had previously been found guilty of "excess of power" while on the Chisinau municipal council in a zoning scandal. The Socialists called the move political and promised to appeal to the European Court of Human Rights.
Drama and conflict in City Hall. Mayor Ceban has continued ramp up rhetoric accusing the national government of robbing the city by unfairly redistributing taxes back to local governments. In the abstract, the Mayor is talking about a long standing problem whereby tax collection is highly centralized and in the past redistribution of taxes to municipalities has been politicized. Further, the acute deficits felt by the city are in part because of parliament’s raising of the minimum wages of public sector employees across the country but not providing funding to local governments to cover the difference - something that in America would be called an “unfunded mandate.” The response by the mayor has been dramatic and caused a lot of political consternation. Chisinau has chosen to cut after school programming for kids and to fire a number of Personal Social Assistants while reducing the salary of the remaining assistants by 50%. The city employs 2200 Personal Social Assistants who assist people with disabilities and the elderly - often from the most vulnerable families. Additionally the city is proposing an average increase of 6% on all local taxes, though some taxes, for example the business advertising tax, are set to skyrocket. At one level this is a fairly typical fight between the city and national government. On another level, Mayor Ceban has chosen to target his cuts in a way that is creating major backlash. This story will likely develop further in the weeks to come.
Snow and more drama in City Hall. Last week’s snow storm hit Chisinau particularly hard and resulted in most schools extending the winter holidays by another 2 days and numerous flights being canceled or delayed. Mayor Ceban made statements initially blaming the slow clearing of the snow on city workers and calling on department heads to personally grab a shovel and get to work. Later, after more than 3 days with little snow being cleared, he attacked the national government saying "I don't even know why we have an army... if I haven’t seen a single soldier clearing snow." The Prime Minister’s office responded noting that the city had sent no requests for help but also that the police and emergency services had been working 24 hours a day helping with the situation. This only highlights the increasingly contentious relationship between city hall and the national government.
Facebook is still taking Ilan Shor’s money. Wired magazine reported that Ilan Shor spent more than $200,000 on facebook during local elections in spite of American sanctions. This was done via more than 100 fake pages and posts that garnered 155 million impressions. Some of the ads were still running until 1 day after the story ran at which point it appears that Meta suspended them. Ben Scott, director at “Reset,” the research group that uncovered the coordinated campaign, stated that “Facebook and Instagram have become the handmaidens of Vladimir Putin’s covert campaign to disrupt European democracy, perhaps nowhere more egregiously than in Moldova.” He noted that social media’s content moderation efforts are especially lackluster when dealing with information campaigns in languages other than English.
Economics and Infrastructure News
Here is a rapid fire roundup of the main economic and infrastructure news of the past weeks:
Moldova’s 2023 inflation ended the year at 4.2% annual. This marks a major fall in inflation from the 35% inflation experienced in 2022, but real wages have not caught up. Further, GDP grew only 1.5% in 2023 and has not offset the loss of 6% in 2022.
Ukrainian entrepreneurs are supporting economic growth. Since the beginning of the war 218 Ukrainian citizens have started companies in Moldova in the fields of transit, trade, IT services and more. These companies have resulted in around 1.8 billion lei in additional tax revenue and experts hope that these new connections will result in larger investments and more economic interconnection after the war. Moldova currently hosts around 113,000 Ukrainian refugees.
The Ministry of Energy has announced that Moldova will buy liquefied natural gas LPG from the United States for the first time next week. A ship carrying LPG is scheduled to dock next week at the port of Alexandroupolis in Greece. The final price for the gas has not been announced but the Minister said it would be below current European exchange prices. The Ministry of Energy has also stated that a reduce in the price of natural gas of around 10% could come in February.
On January 18th the Chisinau Airport officially changed its 3 letter code from KIV to RMO. This has resulted in some flight booking problems as airlines update their systems to reflect the change. The switch from KIV which comes from the Russian language name of Chisinau to RMO for Republic of Moldova was announced late last year.
Ukraine’s Verkhovna Rada voted to legalize medical cannabis. The vote was 248 for, 16 against with 33 abstentions. Ukraine has majorly pivoted on cannabis policy since the beginning of the war citing the needs of veterans suffering from PTSD. The new law provides for licenses for cultivation and requires 24 hour surveillance of crops and unlimited police access to facilities. Sale of cannabis for recreational use will remain criminalized and prescriptions will be required to purchase cannabis products. Moldova has never seriously considered liberalizing cannabis laws, but the legalization and regulation in Europe’s largest agricultural economy is likely to have knock-on effects in the region as EU countries continue to liberalize their laws.
Ending on a… strange note?
Simon Leviev, also known as the “Tinder Swindler” due to the popular Netflix documentary, apparently spent New Years in Moldova. Leviev, who also goes by a number of criminal alias, was arrested and imprisoned for a complex and frankly bizarre ponzi scheme conducted on Tinder. He has since been released, though he is still wanted in a number of other countries. It’s unclear why he spent the New Year in Moldova in a restaurant assumed to be owned by Vladimir Plahotniuc. So there’s a strange pop culture reference for the week!