The Transnistrian conflict has been frozen for more than two decades. Given its enduring ceasefire, decreased ethnic tension, and the high connectivity between the banks of the Nistru River, the rift had the reputation of the most solvable secessionist conflict in the post-Soviet region. However, the calculus changed after the annexation of Crimea, and some predicted that Transnistria would become the next flashpoint. This fear was not realized. Paradoxically, Russia—which had opposed the Deep and Comprehensive Free Trade Area between Moldova, Ukraine, and the EU in 2014—readily accepted the DCFTA’s extension to its regional client, Transnistria, in 2015. Rather than turning up the heat, Moscow ensured that the situation remained peaceful.

Recent changes within Moldova have brought the Transnistria issue back into the headlines. The election of Igor Dodon—who campaigned on a pro-Russian ticket—as the president of Moldova suggested progress may be made in settling the intractable conflict. But with limited powers under Moldova’s Constitution, the president cannot act alone—and the Moldovan government is unlikely to come to heel. It renewed demands for Russia to withdraw its military from Transnistria and, in August, declared the Russian Deputy Prime Minister Dmitri Rogozin a persona non grata.

Many believe this portends a re-escalation of the conflict. Transnistrian leader Vadim Krasnoselski warned that “Moldova has not given up on intentions to solve the conflict militarily”. Moldovan president Igor Dodon claimed that government in Chisinau follows a script written abroad by those “craving for war,” mentioning Romania and NATO. Nevertheless, the rhetoric is likely more about domestic power consolidation and attracting financing than impending war in a region that has been relatively calm since 1992.

Money with no strings attached

Conventional wisdom runs that both sides may seek resolution if the stalemate generates intolerable costs, significant domestic pressure encourages a settlement, or the combination of both. But for the time being, Moldova and Transnistria are content with the status quo and feel no urgency to solve the conflict.

In Moldova, there is no strong public demand for conflict resolution. In a survey conducted this year, only 1.3% of respondents considered conflict settlement the country’s number one priority. Problems like public order (24%), economic development (22%), living standards (20%) and the fight against corruption (13%) take precedence.

It is even more pronounced among young Moldovans who have no memory of living in united (even Soviet) Moldova. A survey conducted of 18 to 29 year-olds shows that, if 4.6% thought reintegration of country should be a priority in 2007, only 1% believes so ten years later in 2017. Still, the overwhelming majority believe the separatist republic should be part of Moldova, while rejecting a violent solution. Put simply, Moldovans want peaceful reintegration but only after their most basic needs are met. 

Moldova’s government has made little headway on first-order issues identified by citizens. Weak performance undermined the government’s legitimacy and facilitated the rise of a genuine pro-European opposition. In the 2016 presidential election, the pro-European opposition candidate Maia Sandu—without access to major mass-media outlets and with little funding—came in second with an impressive 48% of votes.

To compensate for the lack of legitimacy and fend off attacks from the opposition (including allegations of corruption and fake pro-Europeanism), the governing party fell back on rhetoric that required few actual reforms but could shift public opinion in its favor. For instance, demands for Russian military withdrawal from Moldova are hardly intended for Moscow and Tiraspol, but instead for domestic and Western audiences.

Domestically, the Moldovan government seeks to sideline emerging opposition parties and win over voters critical of Russia. For Western audiences, the party hopes to portray itself as the only bulwark against the return of pro-Russian parties to power in 2018, when parliamentary elections are scheduled. In addition, by faking tensions around Transnistria, Moldovan government seeks to secure the EU funds without delivering on reform commitments.

At the same time, Chisinau is far from resuming hostilities along the Nistru River. Moldova’s defense spending has been among the lowest in Europe for the past decade (around 0.5% of GDP). Even the war in neighboring Ukraine has not impacted Moldova’s defense budget. In fact, it continued to decline from 0.42% of GDP in 2016 to 0.40% in 2017, along with the number of exercises and military personnel involved. For instance if in 2015, 1504 soldiers from national army participated in 18 military drills, in 2017 1151 military personnel were scheduled to take part in 16 exercises.

The bulk of the budget goes toward salaries and maintenance of crumbling military infrastructure—there are no funds for an arms modernization program or increased military drills. Under current conditions, it would be suicidal for Chisinau to provoke a clash with an opponent who, according to Moldova’s outgoing minister, is much better prepared and armed. The Moldovan government has pursued domestic power and EU funding in unscrupulous ways, but is not bent on war. 

Showing ‘tough love’

The EU has not been inclined to play along. Its generous financial support for Moldova’s “pro-European” governments (from 2007-13, EUR 561 million and from 2014-20, up to EUR 700 million) produced modest outcomes at best. The EU’s image inside the country was damaged as many grew suspicious of its support for what was widely-perceived in society as a succession of corrupt governments.

As a result, the EU retooled its policy in favor a “tough love” approach. It increasingly ignores promises and focuses instead on the integrity and actions of authorities. This change seeks to deny Chisinau the ability to exploit geopolitics rather than undertake tough reforms. Ultimately, weak, poor and dysfunctional Moldovan statehood governed by a corrupt political class can hardly be attractive for the population of Transnistria.

Under this new approach, the EU has doubled down on conditionality. When Chisinau sought macro-financial assistance, hoping to receive EUR 40 million in loans and EUR 60 million in grants, it was instead offered EUR 60 million in loans and EUR 40 million in grants. Moreover, Brussels has for the first time conditioned disbursement of tranches on rule-of-law benchmarks, a move likely to delay money allocation. Of EUR 700 million allotted for Moldova through 2020, only 40% has been disbursed so far. To paraphrase Ostap Bender, the EU signals Chisinau ‘chairs in the morning, money in the evening’.

The “tough love” policy has been accompanied by an incremental approach to Transnistria. Growing dependence on the EU (over 60% of exports from Moldova and Transnistria go to the European market) provides Brussels leverage to coax both sides to lift barriers and build mutual confidence. There is hope that a moderate, incremental course will foster favorable conditions for a settlement in the future.

One of the EU’s immediate priorities is to facilitate DCFTA implementation in the separatist republic so it can continue to access the European market on tariff-free basis. In the short term, the DCFTA may help to stabilize the Transnistrian economy, and in the long term, it could bridge the economic divide between the banks of the river.

The EU has also reconfigured the EU Border Assistance Mission to Moldova and Ukraine (EUBAM), which was established in 2005. Under a renewed mandate (valid till 2020), the EUBAM will be downsized and its focus shifted exclusively to the Transnistrian segment of Moldovan-Ukrainian border. A nimbler EUBAM will assist with the implementation of the DCFTA and work with Moldova and Ukraine to create joint border control points and fight trans-border crime.

Another EU priority is to reestablish and proliferate economic and societal links disrupted by the conflict. One successful initiative is the reconstruction in 2000 with the EU money of the bridge located between Gura Bacului and Bacioc. The bridge was reopened this month for the first time since the war ended in 1992.

In 2014, the EU allocated EUR 28 million for confidence-building measures between right and left bank. Funds are channeled towards projects in the fields of education, healthcare, migration, trade and small and medium sized businesses. However, Transnistria has demonstrated less interest in confidence-building with Moldova than it has in gaining unconditional access to the EU market.

Eternal free-riders

Public opinion in Transnistria is difficult to assess, as Tiraspol discourages independent polls and sanctioned by the separatist leadership surveys lack credibility. But after two years of sharp economic decline in the region, the concerns and basic aspirations of those on the left bank hardly differ from those on the right.

At the same time, the governing elites in the breakaway republic are as cynical and opportunistic as their peers in Chisinau. They can paint Romania or Moldova as the greatest threat to Transnistria’s existence while simultaneously holding Romanian passports (in the case of Vadim Krasnoselski’s wife, who according to reports in mass-media has Romanian citizenship) or seeking shelter across the border when persecuted at home (e.g. former Transnistrian leader Yevgheni Shevchuk, who temporarily resided in Chisinau).

They cling to the status quo of generous financial support from Russia and preferential access to the European market. For Transnistria’s elite, there is no contradiction between pledging to pursue Eurasian integration and exporting more goods to Romania than to Russia—but this modus vivendi which has served them well is under increasing strain.

When the DCFTA was signed between the EU and Moldova in summer 2014, Tiraspol held out hope that its businesses could export to the European market under the former terms of Autonomous Trade Preferences (ATP). It soon realized that ATP would not be prolonged indefinitely, and that free-riding was not an option.

In late 2015, Tiraspol agreed to a road map that would provide access to European markets in exchange for meeting certain benchmarks. The main conditions are gradual elimination of import tariffs for goods from the EU and the introduction of a value-added tax (VAT). While some progress was made in adjusting customs policies (import tariffs were scraped for 1.900 positions), fiscal reforms have yet to materialize. To justify its inaction, Transnistria has painted itself as a victim of an “economic blockade” that makes reforms ever more costly.

Yet statistics handily dispel any excuses. The number of Transnistrian companies registered in Chisinau—a necessary pre-condition for obtaining an export certificate—has grown by an order of magnitude; in the first half of 2017, it shot up from 1587 to 2396 companies. Moreover, Transnistria’s exports grew by 13% in the first nine months of 2017. The most impressive results were achieved vis-à-vis Ukraine.

Despite claims of an “economic blockade,” the region’s exports and imports increased by 55% and 44%, respectively. In fact, the explosive growth may indicate less smuggling and more legal trade conducted with Ukraine. Contrary to Transnistria’s claims, there is no proof to demonstrate that the Moldova-Ukraine joint check point “Cuciurgan-Pervomaisk” hinders legal trade or imposes extra costs on the breakaway republic.

Tiraspol’s invocation of economic strangulation by Moldova is intended for audiences in Moscow. As the last “pro-Russian stronghold” in the region, separatist leaders hope to extract more favors from Moscow. In 2017, Tiraspol asked for USD 130 million long-term loan on preferential terms—on top of gas provided free of charge (Moldovagaz is billed instead) by the Russian gas monopoly. This time, however, Moscow “does not [want to] believe in tears” and denied Transnistrian requests.

Waiting for the harvest

Breaking with past tradition, Russia declined to provide additional funding and responded measuredly to the installation of the Moldova-Ukraine joint border check point in Cuciurgan. Diplomats involved in negotiations described Russia’s support for Tiraspol on the border checkpoint issues as lukewarm at best. Even frequent user of the social media Dmitri Rogozin deleted some of his more inflammatory posts about Moldova and Romania written in July.

One might speculate that Russia’s belt-tightening at home extends to its regional clients, as well. Economic explanations also help explain Russia’s passive acceptance of the DCFTA’s extension to Transnistria in 2015. With continued access to European markets, Russia’s cost of sustaining the separatist republic would be minimized.

Yet another explanation for non-escalation is a trade-off agreement with Chisinau, in which Russia tolerates new border checkpoints if Moldova continues to buy energy from Cuciurgan power station owned by Inter RAO ES; an informal pact of this type cannot be ruled out. In such a scenario, Moscow would kill three birds with one stone: Moldova would import less electricity from Ukraine than intended, Transnistria would maintain a critical source of revenue (around USD 100 million annually) and Moldovagaz’s debt would grow (up to an astonishing USD 6.5 billion in 2017) as Russian gas powered electricity production in the breakaway republic.

Still, economic factors may play second fiddle to political motivators. The conflict was never about Transnistria as such. It was about influencing Moldova’s domestic and foreign policy. When Russia sees an opportunity to bring friendly political forces to power in Chisinau, Transnistria takes a back seat, at least temporarily. The Party of Socialists from the Republic of Moldova (PSRM), which has campaigned on a platform of reestablishing close ties with Russia, is poised to win big in the next parliamentary elections. The only unknown remains how large its margin will be and whether PSRM will have enough seats to form a government alone.

When courted by Moldova’s government in early 2016, Moscow rebuffed proposals for a reset. Instead, it sought to increase the chance of overwhelming victory for its favored party by scaling up “investments” in Moldova’s president Igor Dodon, former official leader of PSRM.

Dodon has been Vladimir Putin’s most frequent guest this year, meeting six times in the course of ten months. Russia went so far as to announce amnesty for Moldovans who illegally overstayed in the country and selectively re-open markets for Moldova’s agro exports. While it is difficult to verify how many Moldovan citizens actually benefited from amnesty, statistics on exports of products to Russia between January and September 2017 did show moderate growth. Moscow seems to be signaling to Moldovan voters that good things will come out for those who choose PSRM.

Under this logic, an escalation of conflict in Transnistria in the lead-up to the elections would hinder rather than help PSRM’s chances. Intensification of the conflict could trigger an electoral counter-mobilization against pro-Russia actors in Moldova. Not surprisingly, Russian diplomats have called for formal resumption of the 5+2 talks and engagement between Chisinau and Tiraspol.

Moscow was very likely the instigator of a January meeting between the leader in Tiraspol and president Dodon. Shortly after, the Joint Control Commission tasked with peacekeeping and security issues in the disengagement zone resumed its work following a two year hiatus. It was a move that sought to burnish Dodon’s image as a peacemaker for domestic audiences.

Currently, it is in Russia’s interest to maintain calm in the region in order to facilitate the election of a Russia-friendly party in Moldova. However, if PSRM fails to win big or turns its back to Moscow after overwhelming victory (a move not without precedent in Moldova’s politics), Russia’s modus operandi in Transnistria may quickly become much more aggressive.

‘What is to be done?’

The conflict in Transnistria is far from both resolution and explosion. Convergence of international players’ interests in maintaining peace and high levels of connectivity between the Moldova and Transnistria has resulted in stability. But a conflict management strategy that relies upon a sub-optimal equilibrium is hardly enough—more needs to be done to prepare for a settlement in the long term.

The international community should downplay inflammatory rhetoric from Chisinau and Tiraspol and encourage both sides to focus on practical measures that can improve quality of life on both banks of the river. In particular, energies should be channeled toward further implementation of the DCFTA in Transnistria, which may spur necessary economic reforms.

Moldova and Ukraine should also proceed with joint checkpoint installation on the Transnistrian segment of the bilateral border. Border transparency and accountability is in Tiraspol’s interest if it seeks to escape “black hole” stigma, conduct trade legally, and attract investments.

These measures should be complemented by systematic efforts to restore transport, communications, infrastructure, and financial linkages disrupted by the conflict. The information gap between Transnistria and Moldova can be bridged by reciprocal transmission of each other’s TV channels. With time, patience, and incremental opening, those on both sides of the Nistru River may one day see that it is better to be connected than disconnected, and dare to dream of something more.    

This material is a part of “Minimizing the Risk of an East-West Collision: Practical Ideas on European Security” project, supported by the UK Foreign and Commonwealth Office.