Transnistria has now much more room for manoeuvre in its relations with Russia. This does not mean, however, that it has become closer to the European Union.

In mid-April 2020, the heads of all factions of the Russian State Duma made an appeal to the authorities of unrecognised Transnistria to release Oleg Khorzhan, the leader of the local Communist Party.

The initiator of the action was Gennady Zyuganov, the leader of the Communist Party of the Russian Federation, who has maintained close relations with communists from the separatist republic for years.

Khorzhan, despite his relatively young age, can be considered a veteran of the Transnistrian political scene. In 2016 the full power in the separatist republic was taken over by the camp led by the Sheriff company.

Sheriff is a monopoly in many sectors of the local economy. From the mid-2000s it gradually increased its political influence. The political party Obnovlenie, steered by the owners of this company, already took control of the Verkhovna Rada of Transnistria. In 2016, Vadim Krasnoselsky was supported by the party to become the president of the unrecognised republic.

In June 2018, Khorzhan was arrested for organising an illegal meeting. Despite a rather trivial accusation, he remains in prison to date, and his family has raised alarms about the politician’s terrible health. In addition to the leader of the communists, the prison also includes, among others, Gennady Kuzmichev, former minister of internal affairs, once a close associate of former president Yevgeny Shevchuk (accused of leading an organised crime group).

When Yevgeny Shevchuk fled the country, the communists remained as the only political force of opposition.

Accusations are being made against successive communist party activists and social activists. However, the unprecedented appeal by Russian political leaders has not met with any reaction from Tiraspol.

Full seizure of power

Nina Shevchuk

“If Russia had a real influence on the government of Transnistria, Oleg Khorzhanorżan and other political prisoners would be free”, said the former foreign minister of the unrecognised republic Nina Shevchuk during a webinar with Polish experts in June earlier this year.

This statement may be a bit over the top. It is difficult to prove that the case of Khorzhan is really important for Moscow, but Tiraspol’s assertiveness towards the patron is surprising. After all, Transnistria has always been perceived as a Russian client, strictly subordinate to the Kremlin.

Years ago, Dmitry Trenin, a well-known Russian political scientist, warned that in relations with Transnistria, Russia must be careful not to let the tail guide the dog.

Meanwhile, describing the current situation, Nina Shevchuk states: “Moscow is a hostage of the conditions that have developed in the region.”

The situation of the parastate has changed significantly in recent years. This was due to several factors, the most important of which were Sheriff’s seizure of full power and the fact that opportunities opened up for Tiraspol by cooperation with the European Union, including under the Deep and Comprehensive Trade Agreement (DCFTA) as well as the Russian-Ukrainian conflict.

Transnistria now has much more room for manoeuvre in its relations with Russia. This does not mean, however, that it has become closer to the European Union.

The victory of Vadim Krasnoselsky, who represents Sheriff’s interests, in the presidential election in Transnistria in 2016 created a situation quite unique in this parastate: all political power was in the hands of the camp, which also controls the region’s economy. It aroused high expectations of the society and its patron, Russia.

It seemed obvious that the owners of the Sheriff Holding had all the tools in their hands to improve the economy that was on the brink of collapse. This is one of the reasons why Moscow limited its financial support to Tiraspol.

The remittances that allowed the parastate to “close” the budget were over – in some years they reached 40% of the budget. There is an allowance for local pensioners, grants for specific social projects and a specific gas subsidy: Transnistria has not been paying for blue fuel for years, and this debt is borne by the Republic of Moldova.

There is one sheriff in town

Rumours that relations between Tiraspol and Moscow are, to put it mildly, not the best, appeared several or several months after Sheriff took all power. The main reason for the tensions was the fact that the company was not willing to limit its expansion in order to strengthen the economy of the unrecognised republic and give space for development to smaller entities.

Instead, Sheriff used political power to strengthen its monopoly in most industries, including, in particular, import and export controls. Moscow also disliked the fact that the main owner of the Sheriff, Viktor Gushan, was increasingly opening up closer cooperation with Vlad Plahotniuc – the oligarch controlling Moldova and whom Russia treated as a public enemy.

This cooperation had both a business and a political dimension, which was not always in line with Moscow’s interests. As when in the Moldovan parliamentary elections in February 2019, voters from Transnistria, brought in and paid by Sheriff, voted for parties controlled by Vlad Plahotniuc and not the Socialist Party supported by the Kremlin.

Sheriff built its power by entering sectors of the economy that were of little interest to the “red directors” who made up Transnistria. At the beginning it was trading in cigarettes and alcohol, then fuel and the food industry.

Reliefs and concessions obtained thanks to the initially good relations with Igor Smirnov’s entourage, made it possible to create a monopoly on the scale of an unrecognised republic and provided opportunities for expansion abroad. When Sheriff took full power into its own hands in December 2016, there were already solid foundations for the development of business relations with the European Union.

For almost a year, economic entities from the left bank of the Dniester could operate under the DCFTA. The European Union wanted Transnistria to be included in this agreement, inter alia, because for years there has been a belief in the ranks of Western diplomacy that business relations are the only way to bring the parastate closer to the EU and create conditions for resolving the conflict and reintegrating Moldova.

Economically, the plan has succeeded. Transnistria’s business has long been leaning towards the EU, but in recent years 35 to 40 per cent of all exports from the unrecognised republic go to the EU countries. Ukraine is also an important recipient.

It should also not be forgotten that about 20 per cent of Transnistria’s commodity export structure is electricity purchased by the Republic of Moldova. Meanwhile, only about 10 to 12 per cent of local production is directed to the markets of the Eurasian Union.

A certain distance from Russia

Eastern European Futures report

Meanwhile, the owners of the holding company moved most of their assets out of Russia, taking another step towards reducing dependence on a political patron. There is an opinion that the transfer of funds and companies to tax havens, European Union countries, was not without the encouragement and help of European partners.

At the same time, Sheriff was to expand its business portfolio by investing in the financial and media industry.

Already after 2014, the company entered the Ukrainian market more strongly, which was favoured by cooperation with the Moldavian oligarch Vlad Plahotniuc, who had close relations with President Petro Poroshenko. It was a controversial move in the light of the Russian-Ukrainian conflict.

He showed, however, that the Transnistrian oligarchs understand perfectly well that their business future looks more interesting while maintaining a certain distance from Russia. Especially since they are aware of the geographical location of Transnistria, sandwiched between Moldova and Ukraine.

The pro-Western, permanent shift in Kyiv’s foreign policy made its pro-Russian attitude more nuanced.

As a result, as Nina Shevchuk said, Moscow has limited ability to influence Sheriff. It is impossible to reduce financial aid anymore. Cutting off the gas subsidy, which is crucial to the local economy, would mean depriving Chisinau of a tool for pressure.

In addition, it would primarily hit the region’s inhabitants and the Russian business, and not the holding’s interests. The free gas is used mainly by the steel plant in Rîbnița, the revenues of which are supplied to the budget of the parish, not Sheriff’s accounts, and the power plant in Dnestrovsc owned by the Russian company Inter RAO UES.

This does not in any way mean that Tiraspol may make a “geopolitical turn”. Two powerful anchors hold it in Russia’s orbit: the strong pro-Russian identity of the region’s inhabitants and about 1,500 Russian soldiers stationed on the Dniester. Any attempts to depart from the pro-Russian rhetoric could cause mass protests in this small and quite apathetic society, yet attached to its own Russianness.

The current policy of the Sheriff authorities also requires a different view of the presence of Russian troops in the region – they are a threat not only for Chisinau and the West but also for potential subversives in the ranks of the local elite.

Nevertheless, in political and business practice, Transnistria is no longer a clearly pro-Russian factor, which is perfectly illustrated by the example of the 2019 Moldovan elections.

Becoming increasingly sovereign

The new elite of the parastate, which was formed during its existence, perceives its own subjectivity in a completely different way and willingly uses the opportunities created by cooperation with the European Union. This could be considered a kind of success for EU policy in the region, but one should be careful about it.

Sheriff’s owners know that they cannot cross the thin red line, which is Russia’s strategic interests in the region and the maintenance of rhetoric important for Kremlin soft power.

On the other hand, they also know that their republic is seen as a Russian satellite in the eyes of the West, hence any willingness to cooperate with the EU or Chisinau is welcomed with open arms.

As a result, the capitalist-feudalist regime that Sheriff has built on the Dniester is becoming increasingly sovereign. That is, deprived of international control and dangerous to its own inhabitants and the environment.

 

 

This article is part of a project co-financed by the International Visegrad Fund and the German Marshall Fund of the U.S.

Piotr Oleksy, PhD, is a historian and an analyst, working for the Adam Mickiewicz University in Poznań. He is the author of two monographs on Transnistria.


Eastern European Futures

In 2009, the European Union and six of its Eastern neighbours launched the Eastern Partnership (EaP) with the stated aim of building a common area of shared democracy, prosperity, stability and increased cooperation. A decade on, however, progress has been mixed.

Visegrad Insight is published by the Res Publica Foundation. This special edition has been prepared in cooperation with the German Marshall Fund of the United States and supported by the International Visegrad Fund.

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